President Barack Obama’s administration has been putting pressure on health insurance companies to change the way they do business before they’re required to do so under the healthcare reform law.
After Health and Human Services Secretary Kathleen Sebelius publicly requested health insurance executives to explain rate hikes this spring, Anthem Blue Cross of California announced in May it would retract a proposed 39 percent premium increase.
Anthem's announcement followed Sebelius’ urging of governors and state insurance commissioners to ensure that local leaders have the authority to review and approve insurance rate increases before they take effect.
“For too long in this country, Americans have been at the mercy of insurance companies, and have ended up paying a steep price,” Sebelius said.
Last month, HHS launched the Office of Consumer Information and Insurance Oversight to provide grants to states with the best health insurance oversight programs.
Health plans claim they are being unfairly targeted to shoulder all the blame for rising healthcare costs. According to Robert Zirkelbach, press secretary for America’s Health Insurance Plans (AHIP), insurance plans’ total costs – including all overhead, marketing and profits – amount to 4 percent of the nation’s healthcare spending.
“We need to become even more efficient, but reform also needs to address the other 96 percent (of spending),” he said.
According to AHIP, six of the 13 health plans on the Fortune 500 list saw a decline in their profit margin averaging 48.7 percent from 2008 to 2009.
Beginning Sept. 23, 2010, the new healthcare law will prohibit insurance companies from dropping health coverage when someone gets sick. Last month, insurance industry leadership announced that companies would comply with the new law earlier than required.
Karen Ignagni, president and CEO of AHIP, said many health plans already abide by the standards outlined in the new law.
According to Ignagni, more than a year ago health plans proposed reforms that would end rescissions, provide guaranteed coverage with no pre-existing condition exclusions and discontinue health status rating in conjunction with an effective personal coverage requirement.