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Sebelius Talks Tough to Insurers, Needs to Take Action

Cora Nucci, for HealthLeaders Media, September 15, 2010

I'd like to see some guidance from HHS on what constitutes a justifiable rate increase.

That would be a good place to start.

As for threatening to exclude payers from participating in health insurance exchanges in 2014, I doubt it will have any effect on insurers' behavior today.  Payers are no different from providers in that they are mightily challenged to implement systemic changes resulting from healthcare reform legislation.   Who knows how high healthcare costs will be by 2014?  The government's estimate that a 1% or 2% premium rate increase should be sufficient could be well off the mark. 

If Sebelius is serious about keeping down insurance premiums, she's going to need federal legislation that pegs rate hikes to inflation or cost of living increases, or some other marker (unlikely). Or she'll have to enlist the aid of the 25 or so states that don't have the power to regulate insurance premiums, and let them do the heavy lifting. One way or another, she'll have to pull on some levers to get the changes she wants.  Tough talk alone isn't going to cut it.


Cora Nucci is the Digital Associate Editorial Director for HealthLeaders Media.
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3 comments on "Sebelius Talks Tough to Insurers, Needs to Take Action"


Bogey (9/16/2010 at 7:03 PM)
Are you kidding? This is the senior online editor for HealthLeaders Media? And this is the best this publication can do for experienced commentary? -First of all, does the author know that WellPoint admitted to errors in the initial rating for some California individuals, lowered the rate request, and then under state pressure in California lowered it further, projecting a $100 million annual loss in the state? -Second, when she says she's "familiar with the tactic" of asking for more and settling for less, what industry is she referring to? Is she new to the insurance field? As most brokers know, there is the required rate increase (or decrease in some cases – yes, I've seen them!) based on the specific individual/group demographics, then there are plan benefit changes that can be made to reduce that premium. -Thirdly, to her comment that a 1% or 2% rate hike by 2014 "could be well off the mark," is she serious? Could? What world does she live in? The PPACA changes from 9/23 alone are driving rates up substantially, and these aren't the major drivers that the 2014 changes will bring, which may be enormous – some say up to 200%~300% or more for some age groups. -And finally, is she being candid when she reflects that "inflation" or "cost of living increases" are reasonable benchmarks to adjust rates, rather than the cost of care? It's the cost of care, stupid! to rephrase a winning slogan the 42nd president used in his winning campaign. Unless we are willing to look at the facts and reality of the high and increasing cost of care, coupled with the enormous impact of ObamaCare, we are not seeing things as they are and will be unless there is substantial change to the course we are on today with health care reform under this administration. If this kind of feckless commentary is indicative of the quality of HealthLeaders, we're in trouble.

Todd (9/15/2010 at 2:28 PM)
So lets see, on average Medicaid reimburses hospitals about 20% below cost. And the healthcare reform act significantly increases Medicaid eligibility and hospitals make up for the government healthcare shortfall through private payers. Not to mention the adverse selection insurers will incur. And Sebelius says premiums will only rise 1-2%! What a joke. This is exactly the type of preying upon the ignorance of Americans by propagating misleading information that this country cannot afford.

JoeAccounting (9/15/2010 at 1:47 PM)
I dont disagree with the author, but I give Ms. Sibelius the credit for starting the discussion.