News & Events

Health boss cautions insurers on rising rates

By Ricardo Alonso-Zaldivar, Associated Press

WASHINGTON — President Obama’s top health official warned the insurance industry yesterday that the administration will not tolerate blaming premium increases on the new health care law.

“There will be zero tolerance for this type of misinformation and unjustified rate increases,’’ Kathleen Sebelius, secretary of Health and Human Services, said in a letter to the insurance lobby.

“Simply stated, we will not stand idly by as insurers blame their premium hikes and increased profits on the requirement that they provide consumers with basic protections,’’ Sebelius said. She warned that bad actors could be excluded from new health insurance markets that will open in 2014 under the law. They would lose out on a big pool of customers, as many as 30 million people nationwide.

The letter to America’s Health Insurance Plans was the latest volley in a war of words over who gets the blame for rising premiums. Polls show that many people expect their costs to go up as a result of the law, but there is also widespread mistrust of the insurance industry.

A health official said the letter is a preemptive move, after the department learned that several smaller carriers around the country are blaming the new law for rate increases this year.

The industry’s top lobbyist responded that the health care law is a factor behind higher rates, but not the only one.

“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,’’ said Karen Ignagni, president of the insurers’ trade group. “It’s a basic law of economics that additional benefits incur additional costs.’’

Sebelius asked Ignagni to help stop the spread of “misinformation and scare tactics.’’

Although the law’s big expansion of coverage will not take place until 2014, several new benefits go into effect starting later this month. Lifetime dollar caps on coverage are abolished, and plans must allow parents to keep their children on the policy up to age 26. Many plans will also have to guarantee coverage for children regardless of a medical condition, and provide preventive care with no cost-sharing for the patient.

The administration estimates that those new benefits will raise premiums by no more than 1 to 2 percent. Major benefit consulting companies say the impact will be in the single digits, although it might vary considerably from plan to plan.