The Obama administration has ordered health insurance company, Trustmark,  to rescind its recent request for a health insurance rates increase after deeming it unreasonable. While this type of demand would normally be reserved for state regulators, the government was granted the authority to address rate increases under the new healthcare reform law.

Trustmark Rate Increase Would Impact 10,000 Customers

A new announcement from Kathleen Sebelius, secretary of the Department of Health and Human Services , says that the White House is ordering Trustmark Life Insurance Company, a unit of Trustmark Mutual Holding Company, to formally address the excessive rate increases it has recently proposed.

Sebelius said the health insurance rates hike, which would affect nearly 10,000 people in Alabama, Arizona, Pennsylvania, Virginia and Wyoming, would average 13 percent across the five states, though increases could reach as high as 27 percent.

The Obama administration believes Its time for Trustmark to immediately rescind the rates, issue refunds to consumers or publicly explain their refusal to do so, Sebelius said on Thursday. Trustmark, which publicly addressed the announcement, says it disagrees with the rescind request as it has been in full compliance with the law.

Healthcare Reform Grants Govt Power to Fight Excessive Rates

Prior to the healthcare reform law being signed in March 2010, the federal government did not have the authority to excessive health insurance rates as exhibited with Trustmark. Instead, state officials would request that insurance companies justify their rate hikes or other behavior deemed unfair to customers.

States still have the right to interject—and possibly even block—health insurance rates if they believe insurers are taking steps to increase their profits at the expense of consumers, but the White House says it plans to improve its own efforts to govern these acts.

The new law calls for an annual review of unreasonable increases in premiums, which is considered any rate hike of 10 percent or more. In the review, state or federal officials will require companies to explain the reason for the increase.

Though the federal government wont have the authority to block company rate increases as some individual states are able to, experts say having the White House publicize unfair premiums along with providing a website to monitor rate hikes may provide new protections for consumers.

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