September 8, 2010 2:05 PM

Health Insurers' Tie Proposed Rate Hikes to Health Care Reform

By
Stephanie Condon
Topics
Health Care ,
Campaign 2010
health care

Health insurers across the country are planning to raise premiums for some of their customers in the coming weeks, the Wall Street Journal reports, and they are in part blaming President Obama's health care reform package for the rate hikes.

On the surface, at least, the news boosts Republicans' arguments against the Democrats' reforms ahead of this year's midterm elections. But the White House and other supporters of the reform package say they are skeptical of the health insurance companies' rationale.

Aetna Inc., some BlueCross BlueShield plans and other smaller carriers have asked regulators to approve premium increases of between one percent and nine percent to pay for the bill's early benefits, the Journal reports. The rate increases would largely apply to individual plans (9 percent of Americans have individual plans) and those offered for small businesses (about 20 percent of Americans get coverage from small employers).

The early benefits cited by insurers for the rate increase include allowing children up to 26 years old to stay on their parents' health care plans, eliminating co-payments for preventive care and prohibiting insurers from denying coverage to children with pre-existing conditions. These benefits apply to all plans, not just individual and small business policies.

The insurers are also reportedly asking for further rate increases they are not tying to the health care overhaul that they say are needed to cover rising medical costs. Some customers could see their premiums increase by more than 20 percent.

Nancy-Ann DeParle, the director of the White House Office of Health Reform, told the Journal that insurers were using the new health reforms as an excuse to raise rates.

"I would have real deep concerns that the kinds of rate increases that you're quoting... are justified," she said. "We believe consumers will see through this."

Health Care for America Now, a coalition group in support of the health care overhaul, slammed the insurance industry and pointed to insurers' history as evidence that its latest claims were misleading. For instance, WellPoint's Anthem subsidiary had to reduce its proposed rate hike in California earlier this year after it tried to justify increases as high as 39 percent with erroneous numbers.

"The health insurance industry is doing the same thing it has always done, raising premiums to achieve excessive profits and outrageous salaries for their CEOs," HCAN executive director Ethan Rome said in a statement.

The complaints haven't stopped Republicans from jumping on the opportunity to criticize the Democrats' policies. Senate Republicans are highlighting the Journal's report while pointing to past comments from Mr. Obama and other Democrats, who promised that premiums would not increase as a result of the reforms.

In Kentucky, Republican Senate candidate Rand Paul slammed health care reforms in his first general election ad.

The health care overhaul has proven to be a harder sell to the American people than Democrats anticipated, prompting at least a handful of Democrats up for re-election to campaign on their vote against the reforms. Moderate Democrat Stephanie Herseth Sandlin (S.D.), for instance, says in an ad that she voted against the bill because "it wasn't right for South Dakota."


Add a Comment See all 21 Comments
by business_owner September 9, 2010 7:54 PM EDT
<i>?It has come to my attention that several health insurer carriers are sending letters to their enrollees falsely blaming premium increase for 2011 on the patient protections in the Affordable Care Act,? Sebelius wrote, referring to the March health overhaul. ?I urge you to inform your members that there will be zero tolerance for this type of misinformation and unjustified rate increase,? she said in the letter.</i>

Does this also include the BCBS small business policies that are not being renewed because of Obamacare ?
Reply to this comment
by Parsifal_tx September 9, 2010 2:08 PM EDT
What did people expect? Did you think that doctors and hospitals will provide care with no pay? That insurance companies will be able to run business in a defecit?

Nothing is free, someone has to pay, whether thats through higher premiums, cut benefits, or higher taxes.
Reply to this comment
by qpublic September 9, 2010 12:16 PM EDT
thank you barak Hussein obama
Reply to this comment
by mmagliaro September 9, 2010 12:16 PM EDT
Honestly, what did you expect? The bill forces the insurers to instantly cover more people on their policies - 25 year old "children". It also prevents them from excluding people for pre-existing conditions.
Well? Well? THAT CARE is going to cost a lot of money! And the insurance companies certainly aren't going to take it out of their pocket.

Some say Obama is a big dummy, not realizing this would happen. No. I think it's all part of his strategy to force us into a one-provider socialized medicine system controlled by the Government. If the insurance companies are denied these increases, and this process continues (force them to increase coverage and benefits, but deny them rate increases), they will either go under, or just quit because they can't make enough money.

That will systematically kill off the private insurance system. Just what Obama wants.
Reply to this comment
by slatep September 9, 2010 12:16 PM EDT
As soon as the health care providers got wind of a possible National Health Care possibility, they started raising the premiums even before Obama got elected.!!

My son's health care insurance premium went up $300 in one month.

Maybe Somebody should start an investigation of these companies and make them justify these exorbitant increases.

By the way, my family physician raised his fee for office visits by the same amount Obama is going to cut Medicare payments to physicians immediately also.
Reply to this comment
by Parsifal_tx September 8, 2010 11:30 PM EDT
Either Obama and Sebelius are truly naive or horribly dishonest. I believe it's the later, and hope that enough Americans realize this.
Reply to this comment
by the_truth_about September 8, 2010 9:22 PM EDT
Insurance rates go up because the cost of service goes up. We have an increasing elderly population with longer lifespans and higher frequency of ailments. More treatments = more outlays by insurance companies. That means they have to collect more. This trend has existed for over ten years. Its going to get worse. Even without Obamacare, premiums and costs to insurance would have gone up. Obamacare adds to this:

1. States are saddled with more of the medicaid costs
2. Insurance companies can only only set premiums at a ratio of 8 to 10 (80% of all revenue must be spent on reimbursements). This means they have a total operating cost of 20% to cover HR, Marketing, Sales, IT, Facilities, and other overhead, fixed costs. Other industry averages are between 40 and 60%. How are private insurance companies expected to compete against govt run plans under that rule?
3. the 12% tax on medical devices adds 12% to almost all medical services. Even a tongue depressor is a medical device. When was the last time you visited any type of doctor and some device wasn't part of the process?
4. Reduced expenditures in medicare means that less doctors will take patients with medicare coverage, forcing people into secondary (Cadillac) plans
5. Private physicians operate as a small business. If the economic and policy environment isn't suitable to them, they have to raise their rates, but the muscle that insurance companies flex on reimbursements means many doctors will close offices or go into consulting. Private physicians wont be able to afford to offer reasonable services.

There are better options to health care reform. Obamacare makes most things worse for most people, and provides a slight improvement for a minority of people.

Fact, if we want costs to resemble 1950's costs, we have to expect service at 1950's levels - that means lower quality healthcare.
Reply to this comment
by ToolMangler1 September 8, 2010 7:13 PM EDT
"The health care overhaul has proven to be a harder sell to the American people than Democrats anticipated,"



That would be because the opposition gutted and crippled the bill beyond recognition (and benefits to the country) before they would allow it to come to a vote. (In this case, "better something than nothing" is wrong and Obama should have 'vetoed' it)
Reply to this comment
by Zach_75 September 8, 2010 7:52 PM EDT
Unfortunately they couldn't block it entirely. There was such strong opposition that they had to deem and pass it. Bottom line is that if they would propose good legislation, both sides (at least some) would be in favor of it. That's the checks and balances set up in the constitution, completely ignored by this administration, not to mention the last one. Let's vote them all out and start over with constitutionalists.
by Smokey75 September 8, 2010 5:37 PM EDT
I am just wondering what did liberals think would happen when you force insurance companies to cover new services. It does not take a rocket scientist to figure out they would pass the extra cost on to the consumer.

Just wait hits only the beginning our taxes will be higher to pay for this and our health insurance premiums will continue to go higher. Is there any liberal out there who can explain how you make insurance companies pay for a new service and it does raise the insurance rate.
Reply to this comment
by ToolMangler1 September 8, 2010 6:21 PM EDT
you are right!! Only the rich sould get a break on insurance rates. After all, if they have to pay like everybody else then they wouldn't stay 'rich', would they!!!!
by Zach_75 September 8, 2010 7:57 PM EDT
Yes ToolMangler1, the rich are only that way because they don't have to pay for the same things you do... oh, wait, have a look at the tax codes. Have a look at the fact that all of the taxes are paid by the top 50% of earners, and the top 1% pay something like 20% of all taxes. But they only get one vote, same as the guy that doesn't pay any taxes. Talk about taxation without representation. How about a fair tax that goes after a percentage of everyone's salary?
by thatavkguy September 8, 2010 5:00 PM EDT
Over the last few years health care costs have gone up single digits or even zero in cost, until this year (don?t believe me, look it up!). Obviously Bc-1948 has no clue that increased services cost more money. Realist 51 is in that same boat saying that it's an excuse just to raise rates. The insurance moguls and the private sector are screwing us, not the politicians that make 6X what the average private sector person makes for similar jobs (not to mention pension). Forcing us to buy anything is unconstitutional. Ridiculous salaries are everywhere your money is, including our government, WAKE UP! YES the insurance companies want to influence the election; don?t they have the right to? Just as unions buy TV add time and support their candidate.
Reply to this comment
by ToolMangler1 September 8, 2010 6:57 PM EDT
"YES the insurance companies want to influence the election; don?t they have the right to? Just as unions buy TV add time and support their candidate."


They are just being greedy. SCOTUS gave them power to buy any politician (or group of them) when they removed campaign spending limits for Big Business and foreign interests this past spring...
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