Citing an analysis by Goldman Sachs that competition in the insurance market is so weak that insurance companies can continue to raise rates even if it means losing customers, HHS Secretary Kathleen Sebelius asked five health plan leaders to "publicly justify" their proposed health insurance premium increases.
Sebelius' request was similar to what she made after a White House meeting with healthcare leaders last Thursday. Yesterday, insurers did not respond directly to Sebelius's request, but maintained that the administration is improperly focusing almost singularly on health insurers in advocating healthcare reform.
America's Health Insurance Plans, the industry lobby, issued a sharp rebuke of Sebelius' comment, but also did not respond specifically to her request.
"The men and women are working hard every day to make the healthcare system better and they do not deserve to be vilified for political purposes, " says Robert Zirkelbach, press secretary for AHIP.
Sebelius sent the letter a week after meeting about the proposed double-digit rate hikes with CEOs of UnitedHealth Group Inc., WellPoint Inc., Aetna Inc., Health Care Service Corp., and CIGNA HealthCare Inc.
"Last Thursday, I asked CEOs to post online the actuarial justification for premium hikes so consumers can see why their premiums are skyrocketing," Sebelius states. "Now, it's time for these insurance company CEOs to do their part to make the system more transparent for the American people. If insurance companies are going to raise rates, the least they can do is tell us why."
WellPoint, which has faced congressional scrutiny for the proposed 39% rate hikes for its subsidiary Anthem Blue Cross, did not comment directly to Sebelius' statement. Kristin Binns, a company spokeswoman, says, "We agree with the goals outlined by Secretary Sebelius and would participate in a comprehensive program that included all players across the health industry, not only in the insurance sector."
Like other insurers called to meet with Sebelius, WellPoint says the net income of health insurance companies represents only a small percentage of healthcare spending and "is only a fraction of what other players, such as pharmaceutical companies, earn," according to Binns.
"We need a comprehensive solution to make healthcare reform a success for Americans, and are disappointed that the administration continues to focus solely on health insurers," Binns adds.
CIGNA, however, "looks forward to continuing the discussion we had last week with Secretary Sebelius surrounding improved transparency and costs for all stakeholders in order to make prices of the care they receive clearer and evident to individuals," says spokesman Christopher Curran.
In her letter, Sebelius noted an analysis from the investment banking and securities firm Goldman Sachs, which found that that "price competition is down" and that "incumbent carriers seem more willing than ever to walk away from existing business."
"To that end, I am reiterating the request I made at our meeting on Thursday: post on your Web sites the justification for any individual or small group rate increases you have implemented or proposed in 2010, and continue to post such a justification in connection with any future increases," Sebelius.
In response, Zirkelbach says, "Health plans proposed more than a year ago robust insurance market reforms and new consumer protections to guarantee coverage for pre-existing conditions."