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Sebelius Blasts Insurance Rates, But Insurers Fire Right Back

Joe Cantlupe, for HealthLeaders Media, February 19, 2010

HHS Secretary Kathleen Sebelius on Thursday criticized what she termed the "shocking" and "skyrocketing" proposed individual coverage rate hikes in seven states, from 23% in Maine to 56% in Michigan.

Touting healthcare reform, Sebelius unveiled a new report, Insurance Companies Prosper, Families Suffer: Our Broken Health Insurance System,  which she said pinpointed "wildly excessive" profits among the country's largest insurers and the lack of competition that will "lock people out and throw them out of the marketplace."

Premium rate increases have left thousands of families struggling in a recession "with an unpleasant choice between fewer benefits, higher premiums or having no insurance at all," Sebelius said at a news conference in Washington D.C.

The insurance industry fired back.

"It's time to stop the politics of vilification and focus on what Americans need most: real health care reform that addresses the serious and urgent problems facing our nation," said Karen Igagni, America's Health Insurance Plans President and CEO, in a statement.

Daniel J. Loepp, president and CEO of Blue Cross Blue Shield of Michigan, wrote a letter to Sebelius after she spoke to the press, saying he was "disappointed" that Sebelius simply mentioned the company's proposal to raise rates by 56%.

"Without context, the story is not complete," he wrote. "Our regulators granted us a 22% increase last year after lengthy negotiations. Despite that granting of the increase, BCBSM sustained losses on individual lines of business of $280 million in 2009."

Sebelius took the opportunity to again push for health reform plans a week before the bipartisan summit called to salvage the teetering legislative plan.

Sebelius has been a key mouthpiece for the administration, a week ago lambasting Anthem Blue Cross after the insurer announced plans to raise rates on its customers in California as much as 39%. Sebelius criticized Anthem's move partly in light of its parent company, WellPoint, taking in a profit of $2.7 billion in the previous quarter. Following her initial criticism, Anthem Blue Cross postponed the rate hikes until May 1.

Chastising insurance company profits, Sebelius said "recent economic data show that profits for the 10 largest insurance companies increased 250% between 2000 and 2009, 10 times faster than inflation."

She targeted individual insurance premium increases. Sebelius called individual insurance the "most vulnerable part" of the health insurance marketplace. Less than 10% of Americans are covered by individual plans, according to HHS.

In response to Sebelius' criticism, AHIP cited medical cost increases as the prime culprit in increasing insurance costs in the individual market.

"Health insurance premiums are increasing in the individual market because of soaring medical costs and because younger and healthier people are dropping their coverage due to the economy," Igagni said. "Increases in the cost of coverage in the individual market spotlight on the urgent need to reduce the growth of underlying medical costs and to bring everyone into the system."

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