May 31, 2020
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Administration report blasts proposed health insurance policy hikes

WASHINGTON — Consumers are facing budget-busting increases in medical insurance premiums, Health and Human Services Secretary Kathleen Sebelius said Thursday, releasing a report the Obama administration hopes will tap public outrage and help revive its stalled health care overhaul.

People buying their own insurance in at least six states, including Maine, have been facing pressure from insurers who want to raise monthly premiums by as much as 56 percent, according to the report. Officials said the problem is likely to be more widespread, but data from individual insurers in different states are difficult to obtain.

“We think it shines a light on the urgency for health reform,” Sebelius told reporters.

The report focuses on the plight of individual policyholders who don’t have access to employer-based health coverage. In Maine, Anthem Blue Cross and Blue Shield of Maine, a subsidiary of insurance giant WellPoint, has a virtual lock on individual health care policies.

Anthem in Maine earlier this year filed a request to raise individual premiums by an average of 23 percent.

About 18,000 Mainers would be affected. Insurance Superintendent Mila Kofman has scheduled public hearings later this month in Portland, Bangor and Gardiner to take comment on this latest request, as well as one from MEGA Life and Health that would affect about 7,750 individual and small-group policyholders.

Meanwhile, Anthem also is appealing a 2009 decision of the Maine Insurance Bureau that denied its requested 18.5 percent premium increase for individual policies. Kofman found Anthem’s request “excessive and unfairly discriminatory” and approved only a 10.9 percent increase.

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In a statement on Thursday, Kofman said the new DHHS report highlights the need for health care reform.

“We need comprehensive reforms to start addressing the cost of medical care, which drives premium increases across the nation,” she said.

The Democratic health care bills pending in the House and Senate would lower costs for many consumers by offering government subsidies to most of those buying their own coverage. Premiums would remain high, but insurers would face greater government scrutiny when they try to raise rates.

Proposed premium increases of as much as 39 percent by WellPoint’s Anthem Blue Cross in California set off a storm of criticism and forced the company last week to announce a postponement. President Barack Obama seized on Anthem as Exhibit A to make his case for sweeping change before a bipartisan White House health summit next week. California officials said more than 700,000 households face increases averaging 25 percent overall and as high as 39 percent for some.

The DHHS report released Thursday was sharply critical of such increases — and eye-popping industry profits — at a time of national recession.

“Last year, as working families struggled with rising health care costs and a recession, the five largest health insurance companies — WellPoint, UnitedHealth Group, Cigna, Aetna, and Humana — took in combined profits of $12.2 billion, up 56 percent over 2008,” the report states. WellPoint’s profits in the most recent quarter alone totaled more than $2.7 billion, according to the report.

In a briefing for reporters, WellPoint executives blamed their rate increases on rising medical costs and a pool of customers that is gradually becoming older and sicker as younger, healthier people drop coverage. They insisted that their competitors are raising rates in much the same way.

“We understand this is a hardship,” said Brian Sassi, president and CEO of WellPoint’s consumer-business unit. “This is not something that voluntarily we choose to do.”

Spokesman Chris Dugan of Anthem in Maine said Thursday that Maine’s insurance regulations — which require companies to provide coverage despite pre-existing conditions and also limit how much premiums can vary to reflect an individual’s health history — contribute to the problem.

“People who are on the younger side or who are not using health care services tend to drop out,” he said. “So the people who are left in the pool are those who need more services, and there are sick people coming into the pool all the time.” This adverse selection in Maine’s individual market means that Anthem in 2009 spent $2 million more to pay individual policy claims than it received in premiums for those policies, Dugan said.

Companywide in Maine, he said, Anthem in 2009 paid out 92 cents of every premium dollar for health care services.

The HHS report found that Anthem’s requested increases are in line with increases sought by insurers in other states — at a time of robust profit growth for the companies and a lack of competition in most states.

Michigan’s Blue Cross Blue Shield plan requested approval for premium increases of 56 percent in 2009.

In the state of Washington, rates for some individual health plans increased by up to 40 percent until regulators cracked down.

Other states cited in the report were Connecticut, Oregon and Rhode Island.

Maine is home to Sens. Olympia Snowe and Susan Collins, Republican moderates whose support Obama would like to have for his health care legislation.

Collins, in a media interview on Thursday, said she is optimistic that a new bill will come out of next week’s bipartisan White House health care summit.

Collins said “partisan gridlock and bitter rhetoric tend to conceal there are many significant reforms both parties agree on.”

U.S. Rep. Chellie Pingree called the information in Thursday’s report “outrageous.”

“Anthem’s claim that they don’t have any choice just doesn’t pass the straight-face test when they are raking in record profits and paying their CEOs millions of dollars,” the 1st District Democrat said in a prepared statement.

The Maine Democratic Party took advantage of the opportunity to blast Anthem.

“Secretary Sebelius’ report today confirms what many of us only suspected — insurance companies will not hesitate to gouge consumers in order to raise their own profits,” said party spokesman Arden Manning in a press release. “Insurance companies are profiting on the backs of middle-class Mainers, and it’s just unaccept-able.”

The premium increases affect the most vulnerable part of the health insurance market, policies marketed individually to customers buying their own plans.

According to the Census Bureau, only about 9 percent of Americans purchase coverage directly, while nearly 60 percent are covered under employer plans. Family premiums for those with workplace coverage rose 5 percent last year, even as inflation fell 1 percent, but nowhere near the rates seen in the individual market.

The health care legislation pending in Congress aims mainly to address the insurance problems of individuals and small businesses. While requiring most Americans to carry coverage, it would provide subsidies to make premiums more affordable.

It also would create a new kind of insurance supermarket for individuals and small businesses, offering a range of competitive plans comparable to what federal employees have.

Yet it would not be a free ride. A Congressional Budget Office analysis last year found that the Senate Democrats’ bill would raise the average premium per person in the individual market by 10 percent to 13 percent, mainly because insurers would have to sell more comprehensive coverage. The government would pick up much of the tab, however. The majority of the people purchasing their own coverage would be eligible for assistance averaging two-thirds of the cost of their premiums.

BDN writer Meg Haskell and The Associated Press contributed to this report.

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