Obama To Insurers: Health Reform No Excuse For Big Rate Hikes

President Barack Obama warned a dozen large insurers not to use the new health law as an excuse for boosting premium rates at a White House meeting Tuesday, The Washington Post reports. After acknowledging that insurers weren't solely responsible for rising medical costs, the president said, "we've got to make sure this new law is not being used as an excuse to simply drive up costs. … The CEOs here today need to know that they're going to be required to justify unreasonable premium increases" (Aizenman, 6/23). 

Politico: "The private session hit on some tensions between the White House and the insurance industry, which has often griped about having its premiums capped while being forced to absorb higher costs charged by providers and pharmaceutical firms." Health and Human Services Secretary Kathleen Sebelius said the meeting included "some conversation about the notion that if we want to get at costs, we have to also get providers and pharmaceuticals at the table. … I think that's accurate — that the underlying cost drivers are not isolated from insurers." Still, the administration publicly touted new regulations meant to curb the industy's most notorious practices, such as dropping coverage for people who get sick (Kliff and Haberkorn, 6/23).

The New York Times: "The White House is concerned that health insurers will blame the new law for increases in premiums that are intended to maximize profits rather than cover claims. The administration is also closely watching investigations by a number of states into the actuarial soundness of double-digit rate increases." Under the new law, states continue to regulate insurance but the federal government will have new powers to publicize insurance prices (Sack and Stolberg, 6/22).

Reuters: In comments after the meeting, Obama "pointed to states such as Maine, Pennsylvania and New York that are addressing sudden spikes in health insurance rates that he said underscored the need for the landmark healthcare reform legislation passed three months ago. Pennsylvania is investigating the state's nine largest health insurers over rate increases that Governor Edward Rendell called exorbitant while California officials have investigated WellPoint's proposed increases of as much as 39 percent that the insurer later called a mistake" (lambert and Heavey, 6/22).

The Wall Street Journal reports that insurance executives cautioned that the legislation would inevitably raise rates to some extent, because it would require health plans to offer better benefits. "Ron Williams, chief executive of Aetna, cited the law's rule that insurers allow children to stay on their parents' plan until age 26. That rule 'does increase costs, and that cost is going to show up in the premium increases,' he said. Mr. Williams said insurers told Mr. Obama that hospitals, drug makers and doctors were also responsible for the underlying rise in the cost of care" (Adamy, 6/23).

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