Health Insurers Adopt Reform Changes Early; WellPoint Reports Rising Profits
Following announcements by leading health insurers that their firms would end the practice of rescission, or stripping the sick from their roles, the broader insurance industry followed suit, according to a letter from America's Health Insurance Plans to congressional Democrats, Politico reports. "The decision to end rescission was made during a Tuesday afternoon conference call of chief executives organized by their trade group, America's Health Insurance Plans, and represents the industry's latest attempt to build political good will after the bruising health care fight." The new health law would require the policy change by September, but insurers have decided to act early (Frates and Haberkorn, 4/28).
Bloomberg BusinessWeek: "WellPoint Inc. and UnitedHealth Group Inc., the biggest U.S. health insurer by sales, said earlier this week they would no longer cancel customer policies without evidence of fraud or intentional misrepresentation." In addition, other AHIP members will also end the practice in May, according to the trade group's top executive, Karen Ignagni. The shift was likely prodded by an April 27 letter from Democratic lawmakers asking insurers "to end any such abusive practices immediately" and by comments supporting such a move from Obama administration officials (Armstrong, 4/29).
The Hill: "Insurers last month, likewise under pressure from the White House, agreed to cover children with pre-existing conditions starting this year. The industry initially argued that the new law does not require them to do so until 2014" (Pecquet, 4/28).
Los Angeles Times: Also in insurance news, Sen. Dianne Feinstein, D-Calif., immediately criticized the insurer WellPoint, which announced a 51 percent jump in earnings for the first quarter, but also attempted to raise premiums for some California policyholders by as much as 39 percent earlier this year. The rate hikes are on hold pending regulators' review, but Feinstein said the insurer should drop the plan entirely in light of the earnings report. WellPoint executive Angela Braly said WellPoint was "off to a good start in 2010," but that earnings lagged because of the delayed California rate hikes (Helfand, 4/29).
The Wall Street Journal: "So far, the new health law has had little impact on health insurers, whose business practices were the main target of overhaul efforts, and only a modest effect on drug companies. On Wednesday, WellPoint Inc. provided the latest evidence that health plans are continuing to thrive in the wake of the law's passage last month." So far, drugmakers have suffered comparatively greater losses, although insurers expect increased costs as more provisions of the health law take effect in the coming months. "Drug companies are expected to benefit from the new law, which will hand them more paying customers for their medicines and delay generic versions of profitable biotech drugs. In the short term, though, they are confronting costly changes that take effect right away, such as taxation of retiree drug subsidies, discounts on drugs in the Medicare 'doughnut hole' and steeper rebates to Medicaid" (Johnson, 4/29).