Insurers and Insurance and Insurance Benefits and Anthem and WellPoint and Health Insurance and Health Care & Life Sciences and Health Care & Insurance

Sebelius asks insurers to justify rate hikes

March 4, 2010

Health and Human Services Secretary Kathleen Sebelius told the nation's leading health insurers Thursday to publicly justify a spate of double-digit premium hikes that have infuriated consumers in at least a half-dozen states.

Meeting at the White House with the CEOs of Indianapolis-based WellPoint, Aetna, Cigna, UnitedHealth Group, as well as several state insurance commissioners, Sebelius asked the companies to post online their justification for proposed rate hikes primarily affecting customers who directly purchase their coverage.

"At the very least, we need some transparency," Sebelius told reporters after the meeting. "We need people to understand what's going on." The information can be difficult to obtain, since it's usually filed state-by-state.

The White House staged the event to underscore what it calls the urgent need to pass President Barack Obama's health care overhaul. Obama advisers hope that highlighting the rate hikes will put pressure not just on insurers to lower rates but also on Congress to agree on final legislation after a year-long effort.

Obama has pointed to the rate hikes as one of the main arguments for Congress to pass his plan. It would set up a new competitive marketplace for individual customers and small businesses, leading to more predictable premiums. It also would create a new consumer protection body with the power to deny unreasonable rate hikes, roll them back and obtain refunds for policy holders.

Sebelius got a polite hearing from the executives, but there was no agreement on her request for full disclosure.

"I think the response to it was constructive, but there were no commitments of any kind," said UnitedHealth CEO Stephen Hemsley.

Angela Braly, the head of WellPoint, said she wants to explore with the National Association of Insurance Commissioners better ways to tell consumers about the reasons for rate hikes. Doctors and hospitals are charging more, she explained, and "we're often in the position of being the bearer of bad news."

Noting that the companies are making healthy profits, Sebelius said she will keep pressing her request. "At least the bright spotlight may help to discourage some of these wildly exorbitant increases from occurring," she said.

Obama dropped by the meeting in the Roosevelt Room and underscored Sebelius' point that such rate hikes can't go on forever. The president has painted a bleak picture of spiraling costs and eroding coverage if lawmakers fail to pass his plan — and he's keeping the pressure on insurers as he demands a vote in Congress.

The rate increases mainly affect people buying their own coverage directly, as opposed to the majority who have employer-provided policies. Wellpoint subsidiary Anthem Blue Cross recently announced plans to boost individual insurance premiums in California by as much as 39 percent.

Since then, Sebelius said she's heard from many Americans who are worried they won't be able to afford insurance. Wellpoint has temporarily put its rate hike on hold.

Sebelius said the long-term solution is the new health insurance marketplace that Obama wants to create for individuals and small businesses. Once it goes into operation in 2014, it would foster competition and help keep rate increases in check.

Although the insurance industry opposes much of Obama's overhaul plan, the CEOs said they share the administration's concern about rising cost. It's leading their healthiest customers to drop coverage, leaving the companies with a relatively sicker pool of people.

Aetna's Ronald Williams praised the administration for bringing the group together and said: "This is what we need more of — everyone at the table collaborating."

"People are reaching the breaking point," when it comes to premiums, said Sandy Praeger, Kansas' insurance commissioner.

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