PA launches investigation in to heath insurers over rate hikes

Yesterday, Pennsylvania Governor Rendell announced that the state’s Insurance Department will be launching an investigation into the pricing practices of Pennsylvania’s nine largest health insurers.  The investigation hopes to determine the reasons behind several controversial rate increases and whether or not those increases were driven by dubious health profiling tools.

Typically, rate increases have averaged 5-10% in the state however, some have seen annual increases in excess of 50%.  The Governor charges that these increases are being pushed through before federal reforms are in place in order to have the highest possible rates ahead of new regulation.  The state’s Insurance Commissioner Joel Ario said the investigation came about after market research, surveys and reports all suggested that insurers were expanding their use of individualized medical questionnaires and drug profiling – practices which influence rates and that many view as questionable.

Two companies Highmark and Independence Blue Cross were not included in the investigation because they do not use these tools.  The administration set up an agreement with Highmark to hold off on the introduction of such questionnaires and was hoping that agreement would temper the use of such tools in the market.

Pennsylvania is one of the weaker states when it comes to protections against rate increases for small businesses. Gaps in regulation like no caps on rate increases for groups with members who have serious health conditions leave the market vulnerable to such practices.

The Governor is pushing for legislation to limit increases and disruptive practices in the state’s health care markets before federal reforms take effect. “The stories coming in from disadvantaged groups are heartbreaking,” the Governor said. “I urge the General Assembly to give the commissioner the authority needed to stop these rate increases, or we’ll likely see a lot more disruption between now and 2014.”

At the federal level, HHS Secretary Kathleen Sebelius announced a new grant program this week that is aimed at helping states increase oversight of insurance premiums and rake hikes.  The grants will go to states that effectively show how the money will be used to develop or enhance their oversight processes.