HCR War of Words Heats Up over Potential Cost Hikes

September 10, 2010 (PLANSPONSOR.com) – The Washington war of words over the impact of health care reform on premium increases got a bit more heated with a demand to an insurer’s trade group not to blame such cost hikes on the health reform bill.

That demand was transmitted in a letter Thursday from U.S. Department of Health and Human Services Secretary Kathleen Sebelius to Karen Ignagni, head of America’s Health Insurance Plans (AHIP), the national association of health insurers.

“It has come to my attention that several health insurer carriers are sending letters to their enrollees falsely blaming premium increases for 2011 on the patient protections in the Affordable Care Act,” Sebelius contended in the letter released publicly by HHS. “I urge you to inform your members that there will be zero tolerance for this type of misinformation and unjustified rate increases.”

Sebelius argued the reform bill will have a “minimal” impact on rate hikes – 1% to 2% according to HHS estimates – and cited several private-sector organizations releasing similar cost predictions. The HHS official also argued that any premium increases will be moderated by out-of-pocket savings resulting from the law. 

“Given the importance of the new protections and the facts about their impact on costs, I ask for your help in stopping misinformation and scare tactics about the Affordable Care Act,” Sebelius wrote in the letter. “Moreover, I want AHIP’s members to be put on notice: the Administration, in partnership with states, will not tolerate unjustified rate hikes in the name of consumer protections.”

She said HHS has provided 46 states with resources to strengthen the review and transparency of proposed premiums and that the agency would issue later this year a regulation that will require state or federal review of all potentially unreasonable rate increases filed by health insurers, with the justification for increases posted publicly for consumers and employers. 

Further, she said HHS is tracking insurers “with a record of unjustified rate increases” and threatened that those plans may be kept out of the insurance buying pools scheduled to be implemented in 2014.

A statement in response provided by Ignagni to National Public Radio read:

“Health insurance premiums are increasing because of soaring prices for medical services, the impact of younger and healthier people dropping their insurance during the weak economy, and additional benefits required under the new law.” 

The AHIP statement continued: “The new health care reform law mandates that health insurance coverage include a wide range of new benefits beyond what many families and small businesses previously purchased.  It’s a basic law of economics that additional benefits incur additional costs, and the impact on premiums depends on the type and amount of coverage policyholders had before.   Health plans will continue to do everything they can to incorporate all of these new benefits while keeping health care coverage as affordable as possible for families and employers.”