The Department of Health and Human Services (HHS) has asked Everence Insurance Co. to explain its 12% rate increase in Pennsylvania.  The increase affects about 5,000 people who work for small business.  This is the first time the law has been put to use since its passing.

In this case, the new healthcare law works like this.  The Feds cannot deny a rate increase by any insurer, but they can compel the company to publicly justify its proposed rate increase.   The goal of the law is prevent “excessive” rate hikes by making companies publicly justify them.  Everence has 10 days to post an explanation on its website.  The company has indicated that they are now backing down form the filed rates.
"We have no plans to make any changes," said spokeswoman Judy Martin Godshalk, adding that the company would welcome a discussion with federal regulators.

HHS respectfully disagrees.  “That rate is not justified by what the insurer was expected to pay out in medical claims in the state,” said Health and Human Services Secretary Kathleen Sebelius.  She also went on to say that the review would be "the first of many."

Insurance premiums have been the jurisdiction of the states, with regulation varying widely from state to state.  There is a group of insurance professionals who are actively pushing for federal oversight of the insurance in order for the industry to operate under one set of guidelines, rather than 50.

HHS is focusing their efforts on states that do not have the capacity to study the rate increases themselves.  It said that it is reviewing 35 such cases.