Sebelius warns insurers not to blame rate hikes on health overhaul

Health and Human Services Secretary Kathleen Sebelius on Thursday said insurers who blame their rate increases on the new health overhaul could be excluded from health insurance exchanges and the 30 million new customers they promise, The Associated Press reports. "'There will be zero tolerance for this type of misinformation and unjustified rate increases,' … Sebelius said in a letter to the insurance lobby. 'Simply stated, we will not stand idly by as insurers blame their premium hikes and increased profits on the requirement that they provide consumers with basic protections,' Sebelius said. She warned that bad actors may be excluded from new health insurance markets that will open in 2014 under the law." Sebelius sent the letter to insurer trade group America's Health Insurance Plans. "The industry's top lobbyist responded that the health care law is a factor behind higher rates, but not the only one" (Alonso-Zaldivar, 9/9).

The Wall Street Journal: "The Wall Street Journal reported Wednesday that some carriers are asking for total premium hikes topping 20% starting this month, and the carriers are attributing one to nine percentage points of the increases to new benefit mandates in the law. … [AHIP's top lobbyist Karen] Ignagni, president of America's Health Insurance Plans, said: 'It's a basic law of economics that additional benefits incur additional costs, and the impact on premiums depends on the type and amount of coverage policyholders had before.'" Sebelius said that later this fall, HHS will issue a regulation requiring state or federal review of all "potentially unreasonable" rate increases. "It's unclear how much power that will give state insurance commissioners, who say there's little they can do to stop insurers' rate hikes if the companies can justify charging more for greater benefits" (Adamy, 9/10).

Sebelius aimed her letter both at the larger insurance industry as well as smaller insurers, who had been the first ones to suggest large rate increases. Bloomberg: "The insurers that sent the letters to enrollees include Portland, Oregon-based Regence Group, Obama administration spokesman Nick Papas said in a telephone interview. Regence is a not-for-profit Blue Shield health plan that offers insurance in several states in the northwestern U.S. Samantha Reese, spokeswoman for Regence, confirmed that the insurer had sent letters about premium increases to beneficiaries" (Armstrong, 9/9).

Time: "But it's worth noting that every plan and policy is unique. A small group plan that happens to insure only people without children shouldn't have to charge more to pay to treat children with pre-existing conditions. Likewise, a plan that caters to young adults shouldn't have new expenses from young adults staying on their parents' insurance policies. Individual plans, on the other hand, will still be allowed to charge enough to cover their costs" (Pickert, 9/9).

The Hill reports more on AHIP's reaction to Sebelius' letter, which said the new law should only account for 1 to 2 percent increases in premiums. Ignagni: "Health insurance premiums are increasing because of soaring prices for medical services, the impact of younger and healthier people dropping their insurance during the weak economy, and additional benefits required under the new law" (Pecquet, 9/9).

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This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.