Anthem v. Superintendent of Insurance ? health insurance rate ...

by John Garven on March 9, 2012

The Supreme Court challenge to PPACA isn?t the only case we?ve been keeping an eye on. This past week, Maine?s Supreme Court ruled on an important case that could have a far reaching impact on both? consumers and insurers regarding state regulatory authority as health reform moves forward. In Anthem v. Superintendent of Insurance, Anthem, which is our country?s largest health insurer, challenged a rejection of a proposed individual market rate increase of 9.2% for individual health insurance policies sold in 2011.

Anthem was told by the state that instead of a 9.2% increase, only a 5.2% increase could be issued, and that instead of maintaining a 3-percent profit margin, the company would only be allowed a 1-percent profit. In the case, Wellpoint argued that the state?s Bureau of Insurance decision to limit them to a 1-percent profit margin violated state law and the U.S. Constitution by depriving the company of a ?fair and reasonable return.? However, in its ruling, the Supreme Judicial Court said that Maine?s insurance superintendent had ?properly balanced the competing interests? in arriving at an approved rate increase.

Wellpoint responded that while the company has not decided on its next legal steps in the case, ?we stand by our position that filed rates need to both cover the medical costs for our members and allow for an adequate risk margin to cover unanticipated costs.? The company?s legal options include dropping the matter, asking the state court to reconsider its decision, or asking the U.S. Supreme Court to consider the case.

Maine law, like that in many states, says premium increases cannot be excessive, inadequate or unfairly discriminatory. However, this law sets an interesting precedent, as it appears that the court is giving government regulators the ability to specifically restrict the profits of private companies.

In addition to federal regulatory review of premium rates established by PPACA? in Maine and in 25 other states and the District of Columbia, insurance regulators have the authority to veto rate increases that are considered to be too extensive for at least certain types of health insurance, particularly individual and small-group. In seven other states, regulators are expected to review rate increases before they are issued to the public, but cannot formally stop them from going into effect if they are too high.

Source: http://benico.com/2012/03/anthem-v-superintendent-of-insurance-health-insurance-rate-regulation-at-the-state-level/

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