Regulators claim limited power to control health insurance rate increases

HARRISBURG — As health insurance companies propose some of the largest rate hikes in recent memory, the Shapiro administration says it is limited in what it can do to cap increases and is calling for federal action.

Nearly 202,000 people have canceled their plans through the state's marketplace, Pennie, over the past nine months. That drop occurred after Congress let subsidies lapse, which caused premium payments to skyrocket.

Consumer advocates and healthcare workers are concerned that number will continue to rise if the Pennsylvania Insurance Department approves the 2027 rate increases requested by insurers. They're part of a coalition calling on the agency to approve lower rate requests, if not freeze them altogether.

"Pennsylvania families are being squeezed from every direction, and now insurance corporations want to make it worse by demanding double-digit rate hikes while posting billions in profits and paying their executives eight-figure salaries," Matt Yarnell, president of SEIU Healthcare Pennsylvania, said in a statement.

The insurance department is tasked with reviewing health insurers' annual rate filings. It will release the finalized rates ahead of open enrollment, which runs annually from Nov. 1 to Jan. 15.

Insurers have asked to increase their average rates for individuals by between 10% and 40%, according to the companies' proposals, and for small group plans by between 4% and 34%. For 2024, by comparison, the range was -3.5% to 13% for individual policyholders and an average of 4.1% for small groups.

The department lacks the authority to "uniformly freeze all health insurance rate increases," a spokesperson said. State law says rates can't be "excessive, inadequate, or unfairly discriminatory," and it's up to the agency's actuaries to consider those factors when reviewing the filings.

To analyze the proposals, the actuaries look at historical trends and the companies' submitted predictions involving medical claims, technology advancements, and general costs of providing medical care.

The agency can disapprove a rate filing if it "finds the insurer did not provide sufficient justification," according to a consumer guide published by the department. The spokesperson did not answer Spotlight PA's question about whether the department has disapproved a filing in recent years, while experts who follow the agency's actions couldn't recall it doing so publicly.

During the review process, the department can raise objections and negotiate with the insurer. "The objection process essentially puts an insurer on notice that the Department has questions about certain factors or assumptions," a spokesperson told Spotlight PA in an email. "Most often, the insurer agrees to modify the filing consistent with the Department's objection."

In 2025, insurance companies largely got the rate increases they wanted — some even saw final rates that exceeded what they initially sought. Nearly every company cited the rising costs of providing care and prescription drugs, along with the expected loss of enhanced premium tax credits, when making their request to the state insurance department.

Independence Blue Cross and Highmark, the only insurers that responded to Spotlight PA's request for comment, echoed those reasons this year. They also told Spotlight PA in statements that the proposals strike a balance between mitigating costs for patients and maintaining financial stability for themselves.

Health policy experts say there are a number of factors that contribute to rising costs. The end of the enhanced federal subsidies caused premiums to dramatically increase and pushed younger, healthier people to drop coverage — something state Insurance Commissioner Michael Humphreys warned of last year.

Beyond that, "prescription drugs, physician services, and hospital care (in that order) are the most important drivers of cost increases for health care services," Meredith Rosenthal, a health policy expert with Harvard University, wrote earlier this year.

Rosenthal added that data "suggest that increases in insurer profits don't seem to be driving the high levels of premium growth we are seeing."

Still, many Americans blame insurance companies for rising costs. That includes the coalition Affordable Healthcare for PA, which includes the Pennsylvania Association of Staff Nurses and Allied Professionals and SEIU Healthcare Pennsylvania, among other groups. It claims insurers lean on consumers to protect their bottom lines, as the companies increase administrative salaries and expand business operations.

In August, the coalition hosted a series of protests outside three major insurance companies' headquarters around the state. Kristin Volchansky, advocacy director of advocacy group Action Together NEPA, was there.

"When people are struggling so much to afford just basic necessities in healthcare, there's more that's required of these providers," Volchansky told Spotlight PA. "For too long the emphasis has been on expanding facilities, branding and advertising, and then executive compensation."

The coalition has highlighted Geisinger, a Danville-based health system that also offers insurance. The chief executive of Risant Health, which owns Geisinger, reported total compensation worth millions of dollars in 2024. The group has also pointed out that the parent company, Kaiser Permanente, reported $9.3 billion in profit last year.

Geisinger did not respond to questions from Spotlight PA regarding its rate proposals.

Members of the coalition met with the department in August. Donna Gerhardt, a member from Monroe County who attended, told Spotlight PA that she walked away unsure the agency would do much to significantly slash the rate hikes.

"It didn't sound like they had a whole lot of influence around the actual costs," Gerhardt said.

Patrick Keenan, director of policy and partnerships at the nonprofit Pennsylvania Health Access Network, said that compared to other states' insurance regulators, the commonwealth falls somewhere in the middle of two extremes in terms of power.

"The department's primary goal is to protect consumers and ensure that rates are fair, while kind of keeping that stable, competitive health insurance market," Keenan said.

Keenan described the state as "at a breaking point."

"If we don't do something this year that really works to maximize the number of Pennsylvanians that can keep the coverage that they're already paying for and struggling to pay for, our local communities are going to be hit very hard," he said.

Humphreys, the state's insurance commissioner, recently told WVIA he hopes rates will be lower than what was proposed.

"People are justifiably frustrated that it is taking on a larger piece of their paychecks as the cost of insurance really reflects the increased costs of healthcare and that really bears out across the markets," Humphreys told the news outlet. "We need the insurers to be paying [customers'] claims, but we don't want their premiums any higher than what's necessary to be able to pay those claims."

Rosie Lapowsky, a spokesperson for Gov. Josh Shapiro, said in a statement, "Health care costs are rising across the country as a direct result of decisions made by President Trump and Congressional Republicans that are driving up costs for working families."

"The Shapiro Administration is using every tool available under the law to hold insurance companies accountable, rein in excessive profits, and keep rate increases as low as possible."

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