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Insurers warn of problems with federal regulator

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President Obama's latest push for a health care overhaul could drive health plans around the country into insolvency, according to an insurance trade group.

A plan released Monday by the White House would give the federal government the power to regulate health insurers like a public utility. The Health and Human Services Department — in conjunction with state authorities — would be able to deny substantial premium increases, limit them or demand rebates for consumers.

But the Blue Cross and Blue Shield Association warned against separating premium reviews from the responsibility of state regulators to make certain that health insurers have enough money to pay claims. A separation like that could lead to "multi-plan insolvencies," the association said in a statement.

"The risks of such a proposal — namely undermining the security and stability of Americans' health insurance — must not be ignored," the statement said.

Indianapolis-based health insurance giant WellPoint Inc. also warned about "significant solvency risks" from a federal rate-approval system. The insurer said in a separate statement that additional regulation also would do nothing to address "soaring medical costs," which are the main reason behind rate increases.

Insurers have endured waves of criticism over big premium hikes in individual insurance markets since WellPoint's Anthem Blue Cross said earlier this month it needed to raise rates in California by as much as 39 percent.

Large premium hikes or requests for them also have been reported in Maine, Oregon and Michigan, among other states. The Obama administration has pointed to these hikes — and billion-dollar profits the industry collected last year — as proof of the need for health care reform.

WellPoint said it lost millions last year on individual insurance in California. The insurer said a tough economy is forcing more healthy people to drop their individual insurance. That leaves a higher concentration of sick people who generate medical claims in their risk pools.

Insurers say these problems — not a push for profit — are the main reasons behind cost increases. Insurers and analysts say companies cannot subsidize their money-losing segments with premiums from other parts of their business.

Federal regulation of rate increases could hamper health insurers, said Edward Jones analyst Steve Shubitz. He noted that WellPoint already has said it lost millions and could be hurt if forced to lower premium increases.

"You can't run a business losing money year after year," he said.

But BMO Capital Markets analyst Dave Shove noted that a federal rate review would include an actuary who monitors insurer financial health. He doubts the proposed regulation would push any health plans into insolvency.

But he also said many details remain to be resolved, and a federal regulator might motivate insurers to stop selling individual policies in some markets.

"That is a a very real possibility," he said. "You probably will reduce choice for consumers."

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  1. So much for Eric Holder's conversation about race. If white people have got something to say, they get sued over it. Bottom line: white people have un-freer speech than others as a consequence of the misnamed "Civil rights laws."

  2. I agree, having seen three shows, that I was less than wowed. Disappointing!!

  3. Start drilling, start fracking, and start using our own energy. Other states have enriched their citizens and nearly elminated unemployment by using these resources that are on private land. If you are against the 'low prices' of discount stores, the best way to allow shoppers more choice is to empower them with better earnings. NOT through manipulated gov mandated min wage hikes, but better jobs and higher competitive pay. This would be direct result of using our own energy resources, yet Obama knows that Americans who arent dependent of gov welfare are much less likely to vote Dem, so he looks for ways to ensure America's decline and keep its citizens dependent of gov.

  4. Say It Loud, I'm Black and Ashamed: It's too bad that with certain "black" entertainment events, it seems violence and thuggery follows and the collateral damage that it leaves behinds continues to be a strain on the city in terms of people getting hurt, killed or becoming victims of crimes and/or stretching city resources. I remember shopping in the Meadows area years ago until violence and crime ended make most of the business pack you and leave as did with Lafayette Square and Washington Square. Over the past 10 to 12 years, I remember going to the Indiana Black Expo Soul Picnic in Washington Park. Violence, gang fights and homicides ended that. My great grandmother still bears the scares on her leg from when she was trampled by a group of thugs running from gun fire from a rival gang. With hundreds of police offices downtown still multiple shootings, people getting shot downtown during Black Expo. A number of people getting shots or murdered at black clubs around the city like Club Six on the west side, The Industry downtown, Jamal Tinsley's shot out in front of the Conrad, multiple fights and shootings at the skating rinks, shootings at Circle Center Mall and shooting and robberies and car jackings at Lafayette Mall. Shootings and gang violence and the State Fair. I can go on and on and on. Now Broad Ripple. (Shaking head side to side) Say It Loud, I'm Black and I'm Ashamed.

  5. Ballard Administration. Too funny. This is the least fiscally responsive administration I have ever seen. One thing this article failed to mention, is that the Hoosier State line delivers rail cars to the Amtrak Beech Grove maintenance facility for refurbishment. That's an economic development issue. And the jobs there are high-paying. That alone is worth the City's investment.

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