"Before the Affordable Care Act, consumers were in the dark about their health insurance premiums, because there was no nationwide transparency or accountability. Now, [health] insurance companies are required to disclose rate increases over 10 percent and justify those increases. It's time for Trustmark to immediately rescind the rates, issue refunds to consumers or publicly explain their refusal to do so."
Kathleen Sebelius, Secretary of the U.S. Department of Health & Human Services, quoted in H.H.S. News Release of January 12, 2012, "Affordable Care Act Holding Insurers Accountable for Premium Hikes".
Many States' Statutes require Health and other Insurance Companies to submit proposed Premium increases before raising rates and, if permission is not given to raise rates or is given but for a lesser sum, then the originally requested increases cannot lawfully take effect. Recent examples in particular of Health Insurance Premium increases which State Insurance Commissioners have modified under these powers of approval include Connecticut, New Mexico, New York, Oregon, and Rhode Island according to the Secretary of Health and Human Services. See id.
The Affordable Care Act or "ACA" consists of two sets of laws passed by Congress on the same day. One is the Patient Protection and Affordable Care Act, and the other is the Health Care and Education Reconciliation Act. Together they renumbered and amended the provisions of Section 2794 of the Public Health Service Act which relates to Health Insurance Rate Increase Disclosure and Review. In it, in basic terms, the HHS Secretary was given certain powers concerning increases of greater than 10 percent or "unreasonable rate increases".
More specifically, certain authority was given by the ACA to a part of HHS, the Centers for Medicare and Medicaid Services or "CMS". (What would we be without our acronyms?) See 45 C.F.R. §§ 154.101 - 154.301.
Unlike the prior approval authority given by many States to State Insurance Commissioners over proposed Premium Rate Increase Requests, the ACA provides for after-the-fact authority only to in essence require Health Insurance Companies which have already raised their Premiums by more than 10 percent to "justify" their increase on their websites for all to see. This is what Secretary Sebelius was referring to in the above-quoted News Release about the ACA mandating disclosure and justification of increases over 10 percent.
The ACA further provides that if the Health Insurance Company reduces part of its rate increase but the result is still greater than 10 percent, then in that event the Health Insurance Company must submit its new increase for review all over again. If the resulting amount is not a 10 percent or greater increase then the Health Insurance Company does not need to re-submit its increase for review under the ACA.
In the case of Trustmark Life Insurance Company, however, and in the News Release quoted at the beginning of this post, the HHS Secretary seemed to announce more than the ACA provides. You might call it 'political fill,' by which the HHS Secretary filled in the blanks not explicitly addressed by the law but nonetheless described the law's logical conclusion in such matters.
Trustmark, a Health Insurance Company despite its name, raised Health Insurance Premiums by more than 10 percent in the States of Alabama, Arizona, Pennsylvania, Virginia, and Wyoming. In the apparent absence of approval of the Trustmark rate increases by the State Insurance Commissioners in those States, the HHS Secretary acted under the ACA to declare Trustmark's increases in those States "unreasonable". This meant that, under the ACA, Trustmark will be required to now post this fact on its own website alongside its justification for such a Health Insurance Premium increase.
Yet, as noted, the Secretary did more. She called on Trustmark to:
- "immediately rescind the rates" and "issue refunds to consumers or"
- "publicly explain their refusal to do so."
Clearly, even though the ACA seems to be silent on the subject, if a Health Insurance Company decides to "rescind" its increase after the increase is publicly tagged as "unreasonable," it follows that the Company cannot lawfully keep its 'ill-gotten gains' in that event but should instead return them to the persons who paid those Premiums. If they instead keep those gains even after renouncing the "unreasonable rate increases," such Health Insurance Companies should of course justify that course of conduct.
There is nothing in the ACA which I have found which requires this, however. Common sense and fundamental fairness do require this, whether or not the ACA does. In addition to announcing action authorized by the ACA in this case, the Health and Human Services Secretary also invoked common sense and fundamental fairness.
Poor Trustmark. It probably did not know what hit it.
It does now.
The administrative action taken by the Secretary is announced in this News Release, entitled "Affordable Care Act Holding Insurers Accountable for Premium Hikes" (released January 12, 2012). See, in addition, Robert Pear, "U.S. Seeks Rollback of a Health Insurer's 'Excessive" Rate Increase" p. A11, col. 1 (New York Times Nat'l ed., Friday, January 13, 2012).
The author is Co-Chair of the Health, Life and Disability Insurance Subcommittee of the American Bar Association's Insurance Coverage Litigation Committee.
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