White House emphasizes rising health insurance costs as reason for reform

The Los Angeles Times analyzes how insurance costs became a focal point: "The Democrats' bill was in serious trouble when news broke of planned rate hikes by the California insurer. ... Anthem Blue Cross was seeking double-digit rate increases for many of its 800,000 individual policyholders. Company executives had little reason to worry. Insurers can raise premiums in the individual market as often -- and as much -- as they like, within certain guidelines. For years, such requests were routinely approved."

"The president's political team immediately saw what Anthem had done: The company had given Obama, who struggled for months to find a cogent argument, a simple way to crystallize his case for change. ... Obama and his allies had been arguing, not very successfully, that doing nothing had a price, that rising healthcare costs would cripple the economy ... Anthem's whopping rate increases were an example the White House could cite and -- better still -- something people could easily understand" (Barabak and Helfand, 3/7).

CBS News: "In fact, major insurers are seeking premium hikes for individual policies - people not covered through work: 56 percent in Michigan, more than 25 percent in California, and 20 percent or more in Oregon, Maine, and Connecticut. And double digit increases are completed or pending in at least eight other states. ... With so much controversy, Anthem has been forced to put off rate hikes until May 1, while state officials review them. Anthem's parent company, Wellpoint, made $380 million profit in just the fourth quarter last year. But executives argue they have no choice but to raise rates. 'Hospital costs are going up over 11 percent. Pharmaceutical costs are going up over 13 percent,' said Wellpoint executive vice president Brad Fluegel" (Attkisson, 3/7).

The New York Times: "To bolster the case for a far-reaching overhaul of the health care system, the Obama administration is seizing on a new analysis by Goldman Sachs, the New York investment bank, recommending that investors buy shares in two big insurance companies, the UnitedHealth Group and Cigna, because insurance rates are up sharply and competition is down. White House officials on Saturday said that the Goldman Sachs analysis would be a 'centerpiece' of their closing argument in the push for major health care legislation" (Herszenhorn, 3/7).

Meanwhile, The Hill reports that "Karen Ignagni, president and CEO of America's Health Insurance Plans, said the profits of her sector pale in comparison to others. In the wake of politically unpopular health premium increases in a handful of states, the Obama administration issued a report last month noting that the CEOs of America's five largest insurers were each compensated up to $24 million in 2008."

"The administration's report stated, 'Last year, as working families struggled with rising health care costs and a recession, the five largest health insurance companies -- WellPoint, UnitedHealthGroup, Cigna, Aetna, and Humana -- took in combined profits of $12.2 billion, up 56 percent over 2008.' ... Ignagni took issue with the presentation of that number, asserting that few "go the next step" and analyze profit margins. Citing Fortune magazine, Ignagni said her industry margins are in the two to three percent range while other health industries have margins between 15 and 25 percent" (Cusack, 3/6).

The interview with Ignagni appeared on C-SPAN.

Green Bay Press Gazette: "Like many private companies, local governments struggle with the increasing costs of providing health benefits for employees. The Green Bay School District pays about $30 million a year, while Brown County taxpayers spend about $25 million annually for health benefits that cover county workers. And those costs keep going up. One school district official estimates costs rose an average of 12 percent to 13 percent over the past two decades. ... Local government administrators agree adjustments should be made to benefits packages to address skyrocketing costs. But some employee groups argue generous benefits packages help make up for lagging pay" (Zarling, 3/7).