Federal Law Proposed To Regulate Health Plan Premium Hikes

Cheryl Clark, for HealthLeaders Media , May 14, 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.

Cheryl Clark is senior quality editor and California correspondent for HealthLeaders Media. She is a member of the Association of Health Care Journalists.

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