Insurance Companies Raising Rates (Aka shoot themselves in foot)

Rate hikes on health insurance prompt more criticism from Obama administration

By Amy Goldstein
Washington Post Staff Writer
Thursday, February 18, 2010; 7:27 AM

The Obama administration plans to step up its criticism Thursday of health insurers’ recent efforts to raise their rates — an attempt to harness public aggravation with the industry and rebuild momentum for broad changes to the nation’s health-care system.

Health and Human Services Secretary Kathleen Sebelius has scheduled a late-morning news conference, at which she is to cite half a dozen examples, from Maine to Washington state, in which insurers have in the past year sought large premium increases on people who buy coverage individually. In all but one case, according to a report to be released by HHS, state insurance regulators rejected all or part of the requested increases.

The administration’s attempt to focus attention on insurance prices broadens a strategy it began to employ 10 days ago, when Sebelius wrote a pointed letter to one insurer, Anthem Blue Cross of California. She demanded to know why the company had alerted about 800,000 policyholders that their premiums would rise by as much as 39 percent because of the escalating costs of health care. In response to HHS’s inquiry, Anthem postponed the increase by two months.

The new report cites another example from this year: Anthem Blue Cross Blue Shield of Maine is asking that state to approve a 23 percent rise in premiums for its individual-market customers, after state regulators slashed an 18 percent increase that the insurer requested in 2009. The other cases in the HHS report are from last year.

Most of the instances in the report focus on rates for individuals who buy insurance policies on their own, a partof the insurance market that historically has been the most expensive and widely regarded as flawed. But the report also says that three insurers in Rhode Island asked last year for rate increases — ranging from 13 percent to 16 percent — for all kinds of coverage; state insurance regulators ordered them to withdraw the requests.

Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, the industry’s main lobbying organization, said the administration’s attention to insurance rates was misplaced, because its members were merely responding to changes in the prices charged by hospitals, doctors and pharmaceutical manufacturers.

"The focus needs to be on the underlying increase in health-care costs," Zirkelbach said. He added that the spike in individual insurance rates also stems, in part, from the recession, which he said prompted some younger and healthier Americans to stop buying insurance, leaving companies to sell a greater share of their individual policies to people who are older and sicker and, thus, more expensive to insure.

HHS is casting the insurance industry in an unflattering light during a moment of deep uncertainty over the fate of Congress’s intense debate about the health-care system’s future. Democrats in the House and the Senate have passed health care legislation that in part contains new rules for the insurance industry. But efforts to resolve the bills’ differences were thrown askew by a GOP victory in a special Senate election last month in Massachusetts, which has given the Republicans more clout in that chamber.

In a week, President Obama is to convene a summit with invited congressional leaders from both political parties. White House officials portray the event as a forum to revive momentum behind health-care legislation. Health-care specialists on and off Capitol Hill regard the session as a test of how much change remains feasible.

An administration official, speaking on the condition of anonymity before Sebelius’s remarks, called the attempted rate increases "powerful examples of why we need health-insurance reform."