HHS secretary decries higher rates for health insurance

By Alec MacGillis and Amy Goldstein
Friday, February 19, 2010; A04

The Obama administration stepped up its criticism Thursday of health insurers' efforts to raise their rates, an attempt to harness public aggravation with the industry and rebuild momentum for broad changes to the nation's health-care system.

Separately, Washington area residents holding individual health insurance policies said they have received notices that their premiums are increasing by as much as 40 percent.

At a news conference, Health and Human Services Secretary Kathleen Sebelius cited half a dozen examples, from Maine to Washington state, in which insurers have sought large premium increases on people who buy coverage individually. In every case but one, state insurance regulators rejected all or part of the requested increases.

"It shines a light on the urgency for health reform," she said.

The administration's attempt to focus attention on insurance comes during a moment of deep uncertainty over the fate of Congress's intense debate about the health-care system. The House and the Senate have passed Democratic health-care legislation, but those efforts have stalled.

Ten days ago, Sebelius wrote a pointed letter to one insurer, Anthem Blue Cross of California. She demanded to know why the company had alerted 800,000 policyholders that their premiums would rise by as much as 39 percent. Anthem postponed the increase by two months.

HHS's new report cites another example from this year: Anthem Blue Cross and Blue Shield of Maine is asking the state to approve a 23 percent rise in premiums for its individual-market customers, after state regulators slashed an 18 percent increase that the insurer requested in 2009. The other cases in the HHS report are from last year.

The HHS examples did not include increases occurring in Washington. One District resident recently received a letter from CareFirst BlueCross BlueShield saying the premiums for his family's high-deductible plan are going up from $506 per month to $714 per month, a 41 percent increase. He said the company told him that the increase did not have to do with his family's use of medical care, but that it had decided a whole block of its policies was underpriced.

Stephanie Cohen, an insurance broker with the District firm of Golden and Cohen, said she is seeing many similar rate increases, including some that are even larger for small-business policies. She said the increases had been approved by regulators in the District and surrounding states. Insurance regulators in the District and Maryland were not able to provide details about the rate increases on Thursday.

A regional CareFirst spokesman, Michael Sullivan, said that the average premium increase in the individual market is about 10 percent, but that "given the variation in products, increases in premiums can vary widely as well." He echoed the explanation given by Anthem in California: Because of the recession, many people were dropping their individual plans, leaving a smaller pool of people with greater health needs.

Karen Ignagni, head of the insurance industry's main lobbying organization, America's Health Insurance Plans, took a similar line Thursday. "It's time to stop the politics of vilification," she said. Although Sebelius said insurers are taking excessive profits, Ignagni countered that insurance premiums are responding to "the growth of underlying medical costs" as hospitals, doctors and drug manufacturers have raised prices.

Sebelius and congressional Democrats challenge the industry's position, saying the growth in health-care costs is ebbing slightly. They say the House and Senate legislation would solve the problem of healthier people leaving insurance pools by requiring everyone to buy health insurance, with subsidies for those who cannot afford it.

Republicans dispute that the Democrats' approach would make insurance more affordable.

Senate Minority Leader Mitch McConnell (R-Ky.) pointed to predictions by congressional budget analysts that individual insurance premiums would continue to go up under the proposed legislation, partly because plans would be required to cover more. "This is not what the American people are asking for," he said. "And it's certainly not reform."

Also Thursday, about a dozen Senate Democrats signed on to a letter to Majority Leader Harry M. Reid (Nev.) urging him to add a "public option," a government-run insurance plan that people could buy instead of private plans, to the proposal being cobbled together on Capitol Hill.

The House bill included a public option, but the Senate bill did not. Now that Democrats are considering passing amendments to the Senate bill via a procedure that would require only 51 votes, public-option supporters argue that it could win passage.

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