U.S. Sen. Dianne Feinstein (D-CA) and Rep. Jan Schakowsky (D-IL) again called for passage of companion bills they've introduced to mandate federal oversight of health plan premiums, saying it's clear now that insurance companies are more concerned about profits than patients.
"I've come to the conclusion that the driving force in this sector of our economy is profits for shareholders; it isn't good coverage for beneficiaries and that's a problem," Feinstein said. "I'm concerned, because we have until 2014 until the exchanges go online and there is nothing to stop these companies from raising premiums further."
Schakowsky singled out WellPoint in California, calling it "the poster child for unbridled greed," because of its attempt earlier this year to raise premiums 39% for the commercial market. "The Secretary of Health and Human Services should have the authority to assure Americans that rates are reasonable," she said. In Illinois, she said, some families face 60% rate hikes this year.
The companion bills the lawmakers have introduced would require health plans to submit rate hikes over a certain amount to the Secretary for review and approval.
A spokesperson from WellPoint could not be reached yesterday for comment.
Feinstein acknowledged, however, that the bills, called the Health Insurance Rate Authority Act of 2010, faces challenges because it needs 60 votes and not all Democrats support it. The concern is that rate regulation should be a state-by-state responsibility, but at present, only 20 states allow their administration the authority for such oversight.
"What the (federal) legislation would do is set up a federal floor, that's a guarantee to the consumer that they will be protected," Feinstein said.
The lawmakers joined Healthcare for America Now, a health consumer activist group, which just published a report lambasting the five largest for-profit health insurance companies for reporting a combined net income of $3.2 billion for the first quarter of 2010.
That amount is 31% more than they profited for the same period in 2009, and far greater than medical costs, the advocacy group said.
The insurance companies are WellPoint Inc., UnitedHealth Group Inc., Aetna Inc., Humana Inc. and Cigna Corp.
HCAN's report says one industry executive, United Health CEO Stephen Hemsley, boasted that the growth of their products that feature "consumer responsibility and accountability" saying their "leaner benefit offerings" grew more than 30% to 900,000 people.
Schakowsky took health plans to task for "already trying to wrangle out of provisions in health reform, specifically related to new rules regarding how much must be spent on healthcare versus administration, an equation called a medical loss ratio. For example, she mentioned that WellPoint is "resorting to accounting tricks" by inappropriately moving some administrative expenses into the medical benefit category.
America's Health Insurance Plans, which represents the health insurance industry, blames "soaring prices for medical services" that are "a primary driver of rising healthcare costs, which are placing an unsustainable burden on families and employers," said AHIP press secretary Robert Zirkelbach.
Specifically, he says hospital, physician, and pharmacy prices are responsible for much of the need for the high increases.
And in another recent statement, the health plan industry representative said profit margins for 13 health plan companies on the Fortune 500 list average "3.19% for 2009; for 2008 it was 2.3% for these same 13 companies. Six of the 13 companies actually saw a decline in their profit margin—averaging a decline of 48.7% in profit margin from 2008 to 2009."
But Feinstein and Schakowsky discounted the arguments that insurance plans make to defend their increases, and point to huge salaries that the plan's CEOs are earning.