Obama wants health insurers to defend large hikes

Health insurance companies that increase premiums by more than 10 percent would be required to justify those higher

rates publicly, according to new rules proposed Tuesday by the Obama administration.
While federal health officials said the new policy would help curb unjust increases, there is nothing in the law that allows the federal government to stop the rate increases even if they are deemed unreasonable."California consumers have been suffering under these staggering health rate increases for years," said Betsy Imholz, special projects director for Consumers Union, the nonprofit publisher of Consumer Reports. She said the new regulations would help lift "the veil of secrecy" around what goes into rate increases.

California drew national attention this year when Anthem Blue Cross tried to raise rates as much as 39 percent for its 700,000 policyholders in the state who buy coverage as individuals.
Legislature responds

The proposed increases helped jump-start the debate over national health legislation and prompted the state to conduct an independent actuarial review of the rate increase filing. After the review found that Anthem Blue Cross had erred in its rate calculations, the company reduced its increases to an average of 13.5 percent.

The Legislature responded by passing a measure, which was signed by the governor and will go into effect Jan. 1, that goes further than the federal law. It makes insurers ensure the accuracy of all rate increases for small business and individuals, as well as those imposed on large businesses that exceed 10 percent. The increases must be certified by an independent actuary.

The state Senate failed to pass a bill this year that would have given California regulators the authority to reject unreasonable increases.

The 10 percent threshold announced by the Department of Health and Human Services is a reasonable level to prompt a review, Imholz said. The regulations still need to go through a public comment period before taking effect.Anthony Wright, executive director of Health Access California, agreed, but with a caveat. "This scrutiny can have an impact on rates, but it is not full-blown authority to reject or deny rates," he said.