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Sebelius Cautions Insurers on Rate Hikes

Janice Simmons, for HealthLeaders Media, September 13, 2010

In a sternly worded message to health insurers, Health and Human Services Secretary Kathleen Sebelius said last week that the federal government will not "stand idly by as insurers blame their premium hikes and increased profits" on changes related to the new healthcare reform legislation.

With the announcement this month by several insurers that they were sharply raising their 2011 premiums in light of anticipated costs under new healthcare reform measures, Sebelius said in a letter to Karen Ignagni, president and CEO of America’s Health Insurance Plans that HHS will be keeping track of those insurers. Those plans—or others that have "a record of unjustified rate increases"—could be excluded from health insurance exchanges when they begin operating in 2014, she said.

HHS will issue a regulation this fall that will "require state or federal review of all potentially unreasonable rate increases filed by health insurers, with the justification for increases posted publicly for consumers and employers," Sebelius added.

The HHS letter comes on the heels earlier in the day of a release of a study from Centers for Medicare and Medicaid Services economists that healthcare cost increases may be slightly higher under healthcare reform provisions. Earlier estimates from sources such as the Urban Institute and Mercer, Sebelius said, have indicated that the impact of reform measures "will be no more than 1% to 2%."

"The trends in health costs, independent of the legislation, have slowed. Employers’ premiums for family coverage increased by only 3% in 2010—a significant drop from previous years," she said.

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