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Feds call Az health insurance rate hikes 'unreasonable'

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Health care reform

Feds call Az health insurance rate hikes 'unreasonable'

  • Health and Human Services Secretary Kathleen Sebelius in 2011.
    US Mission Geneva/FlickrHealth and Human Services Secretary Kathleen Sebelius in 2011.

Health insurance rate increases by two insurers in Arizona have been called "unreasonable" by federal reviewers. Hikes of 17 and 18 percent were hit with the label, while other increases — of up to 44 percent — remain under scrutiny.

Health and Human Services Secretary Kathleen Sebelius announced Thursday that premium increases in nine states, including Arizona, had been deemed "unreasonable" under the rate review. While the average requested increase in Arizona was about 20 percent, insurance companies here have requested increases of between 14 and 44 percent for various plans.

An 18-percent hike for health insurance offered by Trustmark Life Insurance Company and a series of 17 percent hikes by John Alden Life Insurance Company, a division of Assurant Health, were recently deemed unreasonable by DHHS reviewers.

Trustmark's review was released in January, and Assurant's on Thursday.

Assurant called its increases "reasonable and necessary" in a statement Friday.

The company said it "is committed to setting premium rates at a level that will allow us to continue to serve the needs of our customers."

DHHS said the proposed increases would result in the insurance companies spending too little on "actual medical care," and were "based on unreasonable assumptions."

"Thanks to the Affordable Care Act consumers are no longer in the dark about their health insurance premiums," Sebelius said in a press release.

"Now, insurance companies are required to justify rate increases of 10 percent or higher.  It’s time for these companies to immediately rescind these unreasonable rate hikes, issue refunds to consumers or publicly explain their refusal to do so," she said.

The reviews are the result of one of the health care reform provisions already in effect, which calls for every proposed increase of 10 percent or more to be scrutinized by independent experts.

While DHHS can't compel insurers to change their rates, the department said that the transparency resulting from the reviews, and laws in some states, can lower insurance increases. Arizona law does not allow the state to reject insurance increases.

According to DHHS, the reviews are "expected to help moderate premium increases and provide consumers with greater value for their premium dollar. Additionally, health insurance companies must provide easy to understand information to their customers about their reasons for significant rate increases, as well as publicly justify and post on their website any unreasonable rate increases."

The reviews are available at

In the first six months of the review program, health insurers have proposed fewer double-digit rate increases, DHHS said.

Besides Arizona, the other states with rate hikes deemed excessive were Idaho, Louisiana, Missouri, Montana, Nebraska, Virginia, Wisconsin, and Wyoming.

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