Governor Rendell Announces New Investigation of Health Insurance Companies

Jun 09, 2010, 10:00 ET from Pennsylvania Office of the Governor

State to Prepare for New Marketplace in 2014 with National Health Care Reform

HARRISBURG, Pa., June 9 /PRNewswire-USNewswire/ -- Governor Edward G. Rendell today announced that the Insurance Department is investigating Pennsylvania's nine largest health insurance companies to determine the reasons behind a pattern of controversial rate increases, and especially the extent to which those increases are driven by the use of questionable health profiling tools.  

"Federal health reform brings many opportunities for health insurance companies, starting with 32 million new customers," Governor Rendell said. "So I am disappointed to see these companies hiking premiums for those most in need of health care, especially when they know that all discrimination against sick people will be prohibited in 2014 under the federal reform law."  

Earlier this week, HHS Secretary Kathleen Sebelius announced a new grant program to help states strengthen oversight of insurance premiums and rate hikes. The grants, worth $1 million, will be awarded to states that demonstrate how the grant funds will be used to develop or enhance their processes of reviewing and approving, disapproving or modifying health insurance premium requests. Pennsylvania will apply for a grant by the July 7 deadline.

"We need a smooth transition into 2014, but instead, we are seeing some truly exorbitant rate increases -- with some small businesses seeing annual increases in excess of 50 percent," the Governor added. "This level of increase is not about passing on increases in health spending, which average in the 5 percent to 10 percent range; this is about companies trying to get the highest possible rates before the federal reforms take effect."  

"Recent market surveillance work, including a department survey and reports from brokers, suggest that some companies are expanding the use of individualized medical questionnaires and drug profiling in the small group market," Insurance Commissioner Joel Ario added. "The two largest health insurance companies, Highmark and Independence Blue Cross (IBC) do not use these tools, but the next seven largest insurance companies all do."  

"We expected to see some improvement last month when we secured Highmark's agreement to hold off on its previously announced intent to introduce medical questionnaires in the small group market," said Ario. "Instead, we've seen increased competition to identify and drive premiums up for the most vulnerable groups."  

Pennsylvania has some of the weakest protections in the nation against rate increases for small businesses, with no cap on rate increases simply because someone in the group has a serious health condition.  However, the law will change in 2014 when individuals and small businesses can buy health insurance through exchanges that will prohibit any premium differences based on health status.  

"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."  

Media contacts:

Rosanne Placey or Melissa Fox; 717-787-3289

Gary Tuma, Governor's Office; 717-783-1116

SOURCE Pennsylvania Office of the Governor