Insurance Commissioner Highlights Investigation on Health Insurance Company 'Profiling' Practices, Urges Legislative Action

Wednesday, July 21, 2010 Health Insurance News
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PITTSBURGH, July 20 Testifying before the House Insurance Committee in Pittsburgh, Insurance Commissioner Joel Ario today discussed the findings of the department's investigation on the rating practices of the top nine health insurance companies in Pennsylvania.

"Our investigation revealed that health profiling, including the use of individual medical questionnaires, will continue to be standard practice in the small group market in the absence of legislative action," Ario testified. "Seven of the nine largest carriers indicated that they intend to continue using medical questionnaires and similar tools even though these same insurance companies support the federal reforms that will prohibit health profiling in 2014.

"We are concerned that these practices could lead to market disruption rather than a smooth transition to a reformed market four years from now, especially since businesses hurt by health profiling are the most vulnerable ones," continued Ario. "If small businesses are priced out of the market now, it will be a big challenge to bring them back into the market in 2014 without further disruption."

The department found that the number of small businesses adversely impacted is relatively low - 12 percent, or roughly one of every eight businesses - but noted these are the same groups that most need health coverage. Ario said it is counterproductive to drive these groups out of the market now and then try to deal with their health insurance challenges in the future.

Ario also testified about other problems in the small group market, including a surge of complaints against Highmark stemming from the company's recent decision to move business to a for-profit subsidiary outside the Insurance Department's rate review authority. Ario said that although Highmark does not use medical questionnaires and agreed to certain restrictions on rate increases, the company has reserved the right to use medical questionnaires in the next administration unless reforms are adopted that limit health profiling and rate increases by all large insurance companies.

"The best solution would be early implementation of the 2014 reforms, which is essentially what the state House passed last year," Ario noted in reference to House Bill 746, which is awaiting action by the Senate. The bill would prohibit health profiling, put strict limits on rate increases and give the Insurance Department strong rate review authority.

"HB 746 would ensure a smooth transition to the insurance exchanges and other federal reforms that will take effect in 2014," said Ario, adding that the department's report included several other incremental reforms that would help the department better protect consumers. "Those reforms include stronger authority to collect information from insurance companies and more transparency for consumers about premium rates and how they are set."

To view the testimony and report findings, go to

Media contact: Melissa Fox, 717-787-3289

SOURCE Pennsylvania Department of Insurance

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