Posted on 05 Mar 2010
The government's top health official summoned health-insurance chief executives to the White House Thursday and told them they need to disclose more data justifying sharp premium increases.
The dressing-down, part of which was televised, was part of a campaign by the White House to build support for its health overhaul as President Barack Obama presses Congress to deliver final legislation to his desk in the next few weeks.
Mr. Obama met at the White House Thursday with more than a dozen House Democrats to begin his last round of lobbying. Some liberals who have expressed concern that the overhaul doesn't include a public insurance plan to compete with private insurers said they felt better about the bill after hearing the president's pitch.
However, Dennis Kucinich, one of the House's most liberal members who voted no when the House passed its version of the overhaul last November, said he is still opposed. The latest version of the legislation would do nothing to "effectively control the pace of increased premiums and increased profits that go with it," Mr. Kucinich said.
The White House says its bill will rein in private insurers and has been pointing to a series of premium increases as high as 39% in states like California to back its case for an overhaul.
Health and Human Services Secretary Kathleen Sebelius called five insurance company executives, including the heads of UnitedHealth Group Inc. and WellPoint Inc., to the Roosevelt Room to request explanation on the recent rate increases.
Mr. Obama dropped by and read them a letter from a 50-year-old cancer survivor from Ohio whose premiums rose 40% this year. He told the group that such rate increases are "unjustifiable," White House Press Secretary Robert Gibbs said.
Insurers said the drug makers, medical-device makers, hospitals and other health-care companies are driving up the underlying cost of medical care. They said that trying to lower premiums without addressing those costs was destined to fail.
"The rate is really reflective of our other parts of the health-care delivery system," Ron Williams, chief executive of Aetna Inc., told the group at the beginning of the meeting. In an interview after the meeting, Mr. Williams said the secretary should have included representatives from those industries.
Ms. Sebelius asked the companies to begin posting information online for consumers to explain how much of their revenue goes toward administrative costs, marketing and actual care, along with other details of the rate increases. She called for "greatly increased transparency about what indeed is going on."
Several executives at the meeting said they didn't immediately commit to posting the information but were open to the idea. Much of that data is already detailed in filings to state insurance regulators, though they are difficult to access. Publicly traded companies report executive compensation and national cost trends, but keep some other measures under wraps as trade secrets. "There might be more transparency out there than you might realize," said UnitedHealth Chief Executive Stephen Hemsley.
The two sides couldn't agree whether insurers are highly profitable or just scraping by. Industry executives rolled out data showing their average profit margin was 2.2% last year, lower than other health industries. Ms. Sebelius cited figures showing that top insurers earned a collective $12 billion in profits last year, a 56% increase from the prior year, but that didn't account for one-time gains.
The health overhaul, if passed, would require most Americans to carry health coverage or face a fine, meaning insurers would get more business.
However, insurers would be required to accept all applicants, including those who are sick. And they would see tougher restrictions on premium increases, particularly through the new state-based insurance exchanges.
The White House has also proposed a new federal body with power to review premium increases. But that may not end up in a final bill due to procedural regulations that might require it to be jettisoned. That would be a relief for insurance companies, who say the panel would duplicate the rate regulation they already get from individual states. "If you have the rules written in the states and the prices written in Washington, there might be a disconnect," said Angela F. Braly, chief executive of WellPoint Inc.