Health and Human Services Secretary Kathleen Sebelius has emerged as the person to watch as the Obama administration scrambles to implement health reform. The health care czarina’s words and silences offer clues about the way health reform will play out for millions of Americans. The rules, the regulations, and the compromises with health care stakeholders will determine the ultimate value of the reforms. What Sebelius said during the long reform debate usually signaled what was likely to happen; when she equivocated early on about the public plan, we knew Obama was prepared to junk that option. Campaign Desk will be watching what the secretary says, with an eye toward encouraging the press to do the same. The entire series is archived here.
Health and Human Services Secretary Kathleen Sebelius is getting very good at scolding insurance companies while mastering the symbolic uses of politics. Sebelius’s latest warning to carriers started with a somewhat confusing story in The Wall Street Journal last Tuesday noting that Aetna, some Blue Cross plans, and some smaller companies have petitioned insurance regulators for increases of between one and nine percent to pay for the new benefits the health reform law now requires them to offer policyholders who buy coverage on their own in the small group or individual market. The Journal also reported that premiums could rise by 20 percent or more for some consumers.
While the increases primarily apply to “new” policies written after October 1, the Journal noted that “consumers could be subject to the higher rates if they modify their existing plans and cause them to lose grandfathered status.” Huh? Did that mean that if consumers tweak their current plans by taking a higher deductible, the higher new rate will sock them too? So who really is getting the increase?
The reporter checked in with the White House, whose top health guru, Nancy-Ann DeParle, said “I would have real deep concerns that the kinds of rate increases that you’re quoting…are justified,” adding that, for insurers, raising rates was “already their modus operandi before the bill” passed. True. Insurers have always raised rates. That’s generally how they stay in business.
A day later, Health Care for America Now (HCAN), an advocacy group active during reform and currently looking for a way to stay relevant, issued a press release apparently based on the Journal story, noting that between 2000 and 2008 the health insurance industry raised premiums 2.5 times faster than medical inflation. Poking the grizzly bear again, HCAN said “frequently insurance companies justify their profiteering with fabricated numbers,” and gave one example, the WellPoint mess in California. More support for this claim sure would have been helpful.
The next day, Madame Secretary released a letter to Karen Ignagni, who heads America’s Health Insurance Plans (AHIP), warning that HHS will “keep track of insurers with a record of unjustified rate increases” and “those plans may be excluded from health insurance Exchanges in 2014.” Sebelius told Ignagni:
It has come to my attention that several health insurer carriers are sending letters to their enrollees falsely blaming premium increases for 2011 on the patient protections in the Affordable Care Act. I urge you to inform your members that there will be zero tolerance for this type of misinformation and unjustified rate increases.
She said that, according to her staff and industry and academic experts, the new protections should contribute only a one or two percent increase.
The letter triggered a bunch of stories, dutifully reporting what Sebelius told the industry. With the exception of a Swampland blog post from Time, reporters didn’t question what was really behind the war of words. Maybe insurance companies are padding their increases, saying that lifting the lifetime caps on coverage will cost more than it really will. Maybe they aren’t. Some of the new benefits, like covering kids who have cancer or cystic fibrosis, will indeed bring higher claim costs to insurers that may justify increased premiums. That’s how for-profit insurance works.