U.S. Offers Cash to States That Reject Insurer Requests to Raise Premiums

The U.S. is offering $600,000 to states that make it harder for health insurers to raise premiums, federal regulators said.

Twenty states won U.S. Department of Health and Human Services “performance awards” for policies that let their insurance regulators reject premium increase requests, said Steve Larsen, director of the agency’s Center for Consumer Information and Insurance Oversight.

Connecticut, one of the states, denied an increase of about 14 percent proposed by a subsidiary of UnitedHealth Group Inc. (UNH) on Sept. 7, instead approving a boost of about 12 percent. The U.S. wants to encourage more states to award their regulators similar power, Larsen said in a conference call with reporters.

“We think that’s the highest level of protection for consumers,” he said.

The 2010 health-care law signed by President Barack Obama authorized Larsen’s office to review, without rejecting, premium increases in states where the U.S. deems regulation weak.

The U.S. has concluded reviews in eight states are at least partially inadequate and began reviewing increases in those states on Sept. 1. The states are Alabama, Arizona, Louisiana, Missouri, Montana, Pennsylvania, Virginia and Wyoming.

Insurers Concerned

The government’s focus on premiums is misplaced, and policymakers in the administration should be more concerned about underlying health costs that drive premium growth, the industry’s Washington trade group said.

“The current focus on rate review ignores the soaring cost of medical care that is driving up the cost of coverage and taking up a greater and greater share of federal and state budgets,” said Robert Zirkelbach, a spokesman for the industry’s trade association, America’s Health Insurance Plans, in a statement issued before Larsen’s conference call.

Two spokesmen for UnitedHealth, based in Minnetonka, Minnesota, didn’t immediately respond to e-mails seeking comment.

To contact the reporter on this story: Alex Wayne in Washington at awayne3@bloomberg.net.

To contact the editor responsible for this story: Adriel Bettelheim in Washington at abettelheim@bloomberg.net.

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