Health insurers with the five largest enrollments nationwide—WellPoint, United, Aetna, Health Care Services Corp., and CIGNA—received a letter Monday from Senate Finance Committee Chairman Max Baucus (D-MT) and Senate Commerce Committee Chairman Jay Rockefeller (D-WV) asking them to explain their calculations behind "unnecessary" 2011 premium increases.
The chairmen are critical of reports that blamed some of these premium increases to coverage changes made through the Affordable Care Act (ACA). Their letter echoed concerns posed in a letter sent by Health and Human Services Secretary Kathleen Sebelius to health insurers earlier this month.
The chairmen said that they had called attention earlier to reports that some major insurers “radically increased profits and reserves" in 2009—some by over 25%. These increases were "clear indicators that insurance companies would not have to significantly increase rates for the next year," they said.
However, some insurers did seek double-digit increases in 2010—before the ACA was passed, they said. "This is irresponsible and unacceptable but is not, unfortunately, surprising," they said. "If an insurer thinks it can continue to impose double-digit premium increases, while providing fewer health benefits and enjoying record surpluses, it is again mistaken."
In 2011, they said, the ACA will require insurance companies to publicly justify premium increases that are deemed unreasonable and requires insurance companies to spend at least 80% of premium dollars on healthcare instead of administrative costs and overhead. By 2014, the ACA will give states and HHS the power to deny participation in insurance market exchanges to plans with a track record of unreasonable premium increases.
"We have and will continue to strongly encourage states and HHS to use their existing authority, as well as the authority created under the ACA to its fullest to ensure that premium increases across the country are justified and communications are honest," they note.
In a statement from America's Health Insurance Plans, press secretary Robert Zirkelbach said that "political attacks won't do anything to make coverage more affordable for working families and small businesses that are struggling in a slow economy.
Several key factors are combining to drive up premium costs, Zirkelbach says. These include price increases for medical services and plus greater use of expensive tests and procedures. In addition, younger and healthier individuals are dropping coverage due to the current economic conditions, meaning that health insurance risk pools are made up of older and less healthy individuals, he says.
And finally, the new healthcare reform law requires that health insurance coverage include a number of benefits that many policies previously did not cover. "Health plans will continue to do everything they can to implement the new law in a way that minimizes disruption and keeps coverage as affordable as possible for individuals, families and employers," Zirkelbach says.
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Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at jsimmons@healthleadersmedia.com.