Federal officials say health insurance premium increases by Trustmark Life Insurance Co. in five states are "unreasonable."
The insurance company raised rates by 13 percent in Alabama, Arizona, Pennsylvania, Virginia and Wyoming, impacting 10,000 people. When combined with other rate hikes made over the last 12 months, rates for small businesses in Alabama and Arizona have increased by 27.2 percent and 18.1 percent, respectively, according to the U.S. Department of Health and Human Services.
The department said it determined the rate increases were unreasonable because the insurer would spend a low percentage of premium dollars on actual medical care and quality improvements, and because the justifications were based on unreasonable assumptions.
"It's time for Trustmark to immediately rescind the rates, issue refunds to consumers or publicly explain their refusal to do so," U.S. Health and Human Services Secretary Kathleen Sebelius said in a press release.
Under the Patient Protection and Affordable Care Act, the federal health care reform law passed by Congress in 2010, health insurance companies must justify any premium increases over 10 percent. State officials, and in some cases federal officials, then can deem whether those rate increases are unreasonable. Some state insurance departments can go a step further and reject the proposed rates to prevent them from going into effect.