Sebelius, Congress Turn up Heat on Health Insurers

A Cabinet secretary and two congressional committees are increasing pressure on health plan leaders to justify premium rate hikes as the Obama administration steps up its fight for health reform proposals.

HHS Secretary Kathleen Sebelius has invited leaders of insurance companies she has criticized for proposed rate hikes to a meeting March 3 at HHS, saying she is "eager to hear the justifications for these increases."

Sebelius made her announcement as the Senate Finance Committee reported it would launch an investigation into insurers. On Wednesday, a House Energy and Commerce Committee oversight panel began hearing testimony about proposed individual insurance rate hikes in California. The actions came on the eve of President Obama's scheduled bipartisan summit on healthcare reform at the White House on Thursday.

In a statement, Sebelius said CEOs of UnitedHealth Group Inc., WellPoint Inc., Aetna Inc., Health Care Service Corp., and CIGNA Healthcare have been invited. Officials of the National Association of Insurance Commissioners have also been asked to attend.

Noting what she termed "significant premium increases, " Sebelius said she wants to see what "steps we can take to create a more stable system that keeps premium costs down for all Americans."

In a House hearing on Wednesday, the head of the nation's largest insurer, WellPoint, indicated it would continue its rate hike plans, referring to proposals to raise premiums for its Anthem Blue Cross individual insurance customers in California to cover higher charges from healthcare providers. WellPoint's Chief Executive Officer Angela Braly said in a statement that recent increases in premiums reflect "general medical inflation" and changes in the risk pool, leaving fewer policyholders to spread the risk. Some Anthem members will see as much as a 39% rate hike.

Braly said neither of the health reform bills approved in Congress "will stem healthcare costs growth and the resulting insurance premium increases, rather high premium increases are expected to result."

Committee Chairman Henry Waxman, D-CA, said thousands of pages of documents reviewed by the committee "raise the possibility that WellPoint may have manipulated its actuarial assumptions to keep its medical loss ratio, a key measure reviwed by California regulators—flat."

A committee memo stated: "Internal company documents appear to call into question WellPoint's assertion that increasing profits was not a factor in the proposed rate increase." It added that WellPoint "padded its rate increase" and suggest that WellPoint's "business plan includes moving consumers into less generous plans."

Meanwhile, Senate Finance Committee chairman Max Baucus, D-Mont, and ranking member Sen. Chuck Grassley, R-IA, sent letters to California's largest insurers seeking "detailed answers" about increases in health insurance premiums. They sent letters to the WellPoint CEO, as well as Aetna, HealthNet, Blue Shield of California, Kaiser Permanente, and UnitedHealth Group.

"Policymakers need to be informed about the reasons for the increases and understand the effects on consumer affordability and access," Grassley said.