By N.C. Aizenman
Washington Post Staff Writer
Wednesday, June 23, 2010; A03
President Obama met with the chief executives of more than a dozen major insurance companies at the White House on Tuesday to caution them against using new requirements in the recently enacted health-care reform legislation as a pretext to substantially raise premiums.
"There are genuine cost drivers that are not caused by insurance companies. But what is also true is that we've got to make sure this new law is not being used as an excuse to simply drive up costs," the president said in a brief speech afterward. "The CEOs here today need to know that they're going to be required to justify unreasonable premium increases."
Karen Ignagni, president of the trade association America's Health Insurance Plans, said she and other industry representatives found the meeting to be a "very constructive" opportunity to make the case that the main cause of rising premiums is not industry greed but recessionary pressures and increasing medical and drug costs.
"For instance, in the small employer and individual market, the economy is causing younger, healthier people to drop coverage, which means that the costs of the [remaining] risk pool is higher because it's older and sicker," she said.
The president's East Room speech, officially held to mark the first 90 days since Obama signed the measure into law, also afforded him a chance to tout a raft of consumer protections in the legislation that take effect this year. These include bans on several discriminatory insurance practices for which specific regulations were issued Tuesday:
As of Sept. 23, no plan will be allowed to revoke coverage of sick members who made unintentional mistakes on their applications or to set lifetime limits on coverage. The administration estimated that more than 100 million Americans face such limits.
Similarly, most plans will be barred from excluding children with preexisting conditions. Existing plans purchased by individuals -- as opposed to employers -- will be exempt from that protection. But it will be extended to all Americans by 2014.
The new rules also phase out most health plans' ability to impose annual dollar limits on benefits. Initially, employer plans issued or renewed beginning Sept. 23, as well as new individual plans, will have to set annual limits no lower than $750,000. That minimum will be raised to $1.25 million the following year, and to $2 million the year after that. Plans issued or renewed after Jan. 1, 2014, will be prohibited from setting any annual limits on benefits the administration deems "essential."
Employers and insurers that wish to delay complying with the new annual limits can apply for an exemption. But they will have to prove to federal authorities that raising their annual limits would force them to significantly reduce coverage or increase rates.
Finally, all new health plans will have to allow parents to designate any available participating pediatrician as their children's primary-care doctor, permit women to see OB-GYNs without a referral from a primary-care doctor and charge the same for emergency services obtained out of the plan's network of hospitals as those provided in network.
While the most broad and controversial elements of the new law will not take effect until 2014 -- including a requirement that virtually all Americans obtain insurance and the creation of state-based "exchanges" through which individuals not covered by their employers can buy plans at competitive rates -- the provisions announced Tuesday are among a series of immediate benefits that congressional Democrats who voted for the overhaul law are hoping will bolster their chances in November's elections.
Obama highlighted that theme in his remarks, introducing several audience members who have faced catastrophic consequences as a result of dollar limits on their health insurance.
"Everyone who favors repeal is welcome to come talk to these people and tell them why we should go back to . . . the way things were," he said. "But you're going to need to explain why they and tens of millions of Americans should have their rights taken away."
For all the political cover the new benefits may provide Democrats, they are kicking in amid rate increases averaging as much 20 percent for individuals, according to a new survey by the Kaiser Family Foundation, a nonprofit research organization. And the new law stops short of giving the federal government direct authority to veto rate increases.
Instead, starting next year the secretary of health and human services will work in concert with states to perform annual reviews of rate increases according to detailed criteria still being hammered out by the administration. Insurers whose higher prices are deemed "unreasonable" will then be obliged to explain the reasons for them on their Web sites. States will also be able to bar them from selling their plans on the exchanges. Meanwhile, though a few states have laws empowering their regulators to reject or limit rate increases, they are the exception.