Administration touts insurance reform

By George Schwarz
The Amarillo Independent

In an attempt to pre­sent the Obama administration as tough on the large health insurance companies, Health and Human Services Secretary Kathleen Sebelius told reporters in a teleconference Thursday that she and the president wanted more transparency on premium rate setting.
She said she had met with the chief executives of five large insurance firms — UnitedHealth Group, WellPoint, Aetna, Health Care Service Corp. and CIGNA HealthCare — and representatives of state insurance commissioners as part of the process.
“The meeting was really prompted by the jaw-dropping rate increases that are being proposed this year and companies around the country, particularly in the small-group and individual market where people have no marketing power, they have no leverage and often are desperate in terms of what in the world they’re going to do,” she said.
The president stopped by the meeting briefly to show a letter from a woman in Ohio who was facing a 25 percent rate increase from the year before.
As a cancer survivor free from the disease for 11 years, she had just received notification that rates would go up another 40 percent, Sebelius said.
In a follow-up teleconference Monday, Sebelius told reporters that the insurance executives were not enthused about making their rate-setting transparent.
As a result, she sent letters formally requesting that the large insurers respond to the administration’s request, she said.
The executives blamed the rising cost of health care for their need to raise premiums, but those rate hikes were far in excess of the rate of health care cost inflation.
Further, the insurance firms were segmenting the market and charging exorbitant rates to individuals and small groups, she said.
When asked if the Obama administration had considered legislation to contain health cares costs, and specifically certificates of need, she said that all options were on the table.
Certificate of need legislation, which originated in the 1970s, attempted to control costs by requiring approval of large capital expenditures with the idea of eliminating duplication of services.
Sebelius said the president called the rates unsustainable, which was the content of Obama’s Saturday radio address to the nation.
In that address, Obama touted the effects of the insurance portion of his health reform legislation:
Eliminate lifetime limits and restrictive annual limits on benefits in all new plans;
Prohibit rescissions of health insurance policies in all individual plans;
Prohibit pre-existing-condition exclusions for children in all new plans;
Require premium rebates to enrollees from insurers with high administrative expenditures and require public disclosure of the percent of premiums applied to overhead costs;
Establish a process for the annual review of unreasonable increases in premiums, requiring state insurance commissioners to work with the HHS secretary and states.
She said the comprehensive health reform package the president is trying to push through Congress would call for greater regulatory oversight on rate setting of the insurance industry and would create a different marketplace by giving leveraging power to the small group and individual policies.
These smaller markets are being priced out of health insurance, she said.
She said she asked the companies to file rate increase information online, retroactive to January. Those filings would also include justifications in terms of medical losses and administrative overhead, claims payouts.
“At the very least we need some transparency,” she said.
“We need people to understand what’s going on because right now we have a situation where the top five companies filed earnings reports of $12.7 billion for 2009 in terms of profit statements.”
It “just doesn’t make a lot of sense” when coupled with the double-digit rate increases, she added.
She said that the companies owe justifications to their customers and to the American public.
But, the secretary said the insurance companies had blamed health care cost inflation for increases in premiums. In response to the Amarillo Independent’s request to Health and Human Services public affairs officials, she never explained whether specific cost containment efforts had been proposed for health care providers.