Sebelius Issues Sharp Rebuke Against Health Insurance Premium Hikes Across U.S.
News outlets paid close attention to HHS Secretary Kathleen Sebelius' release of a new report detailing double-digit insurance premium hikes for individual plans in six states across the country.
Her examples included "requests that insurers made to state regulators to raise rates by 56% in Michigan, 24% in Connecticut, 23% in Maine and 20% in Oregon," The Wall Street Journal reports. "With the future of the health overhaul uncertain, the insurance industry finds itself in a delicate position. Insurers see little relief in sight to contain sharply rising health-care costs that they had hoped federal legislation would help bring under control. They face pressures from Wall Street to deliver returns to investors, while critics shine a spotlight on unaffordable premiums and coverage denials to the sick."
Because insurers are not "required to disclose the underlying medical cost trends by market segment and geography that influence the rate rises," it is hard to know "what factors push up premiums in specific markets" and whether the hikes are justified" (Johnson, 2/19).
Los Angeles Times: Sebelius "said the premiums have contributed to huge insurer gains, citing a report last week that showed the country's five largest insurers made $12.2 billion in profits last year, up 56% over 2008.'These profits are wildly excessive, Sebelius said (Helfand, 2/18).
The New York Times: "The weak economy and the unrelenting rise in the cost of medical care make it increasingly difficult for companies to avoid substantial rate increases - even if those increases provide fresh fodder for Democrats seeking to pass the now-stalled health care legislation in Congress." But [m]any health policy analysts point to the sharp price increase sought by Anthem [in California] as evidence that the way individual insurance is sold in this country needs to be changed" (Abelson, 2/18).
Republicans, however, "dispute that the Democrats' approach would make insurance more affordable," The Washington Post reports. "Senate Minority Leader Mitch McConnell (R-Ky.) pointed to predictions by congressional budget analysts that individual insurance premiums would continue to go up under the proposed legislation, partly because plans would be required to cover more. 'This is not what the American people are asking for,' he said. 'And it's certainly not reform'" (MacGillis and Goldstein, 2/19).
The Detroit News: While Blue Cross Blue Shield in Michigan sought to raise rates 56 percent, the insurer "settled for a lower rate hike -- 22 percent -- following public outcry and pressure from Attorney General Mike Cox. Blue Cross responded to Sebelius' comments saying the nonprofit insurer was being unfairly lumped in with other insurers whose missions may differ. They also noted that Blue Cross faces a different market environment, with the ranks of the uninsured growing quickly in Michigan. As the state's tax-exempt insurer of last resort, Blue Cross is obligated to cover all residents regardless of health status and often takes those rejected from for-profit companies" (Hurst and Rogers, 2/19).
The Associated Press/Washington Times: "The premium increases affect the most vulnerable part of the health insurance market, policies marketed individually to customers buying their own plans. According to the Census Bureau, only about 9 percent of Americans purchase coverage directly, while nearly 60 percent are covered under employer plans. Family premiums for those with workplace coverage rose 5 percent last year, even as inflation fell 1 percent, but nowhere near the rates seen in the individual market" (Alonso-Zaldivar, 2/19).
Meanwhile, stocks of WellCare Health Plans "plummeted" Thursday "thanks to the company's bleak 2010 forecast," Forbes reports. "Though WellCare beat the 44-cent-per-share estimate of analysts polled by Thomson Reuters, analysts and investors were disappointed with the company's worse-than-expected 2010 guidance. For the full year of 2010, WellCare said it expects to earn between $1.90 and $2.15 per share, less than half the consensus forecast of $4.56" (Lindner, 2/18).