Here's the problem with the Department of Health & Human Services (HHS) rate review program: It's ineffective and useless. The agency has no actual authority to force an insurer to lower a proposed premium increase deemed excessive or unreasonable. Instead, the tactic is tantamount to bullying.
HHS hoped that by reviewing proposed rate hikes of 10 percent or more, publicly posting those rate requests, and calling attention to particularly high increases, insurers would be shamed into decreasing the rates. According to HHS Secretary Kathleen Sebelius, the rate review program "sends a message to insurers" that the "days of unfair double-digit rates increases are over."
But as Everence Insurance has demonstrated in response to HHS scolding it for a 12 percent rate hike request, it takes more than public embarrassment and name-calling to change an insurer's mind. "We have no plans to make any changes," said Everence spokeswoman Judy Martin Godshalk.
Heck, it took Blue Shield of California months before it agreed to delay its rate increase--and that was after public outcry, regulator pleadings, and even protests outside its building. It took even more political and public pressure to get the insurer to actually rescind the rate hike.
Insurers continually allege that increasing premiums is merely a self-preservation decision, the only way to combat the rising costs of healthcare. If smaller rate increases are the goal, regulators must be given authority to command the changes and implement negative repercussions when those changes aren't carried out. Using the bully method is like HHS metaphorically calling out to the little kid on the playground, saying, "Hey wimp, give me your lunch money!" hoping that will result in the kid happily relinquishing his money and then sticking around for a warm-and-fuzzy hug and friendly chat. Instead, insurers are yelling back, "Ha, fat chance. You can't make me!" You can't strong-arm someone into doing something if you don't have the necessary muscle.
And Everence didn't just oppose the HHS determination. It provided a solid defense, explaining the conflicting opinions are caused by different methodology used to determine the premiums. The health plan also criticized HHS, albeit in a back-handed manner, for not communicating its perspective or discussing methodology before it announced its determination. "States regularly talk to insurers throughout the regulatory review process," said Dave Gautsche, Everence senior vice president of products and services. "We suggest HHS consider adopting a similar step in their new review process."
The issue extends beyond this one instance. Everence is hardly a major player in the health insurance industry. So if this small subsidiary of a ministry of the Mennonite Church isn't afraid to stand up to HHS, why would large insurers--especially the big guys--hesitate to fight back? Expecting companies like Aetna, UnitedHealth, and WellPoint to simply grin and bear it is simply unrealistic.
Clearly, the agency must do more than just "shine a light," as Sebelius calls it, on insurers' inflated premium increases. Bullying doesn't work in any situation--on the playground or in a regulatory environment. Sebelius also said her agency's action on Everence "is the first of many we will be issuing over the coming months and years." Too bad we can have little hope that the reviews will amount to any real changes in the industry. - Dina (@HealthPayer)