Insurance costs going up, and reformers won’t admit it

Insurance costs going up, and reformers won’t admit it

E. Thomas McClanahan
Kansas City Star
September 22, 2010

In March, the Democrats passed their big bill and gained sole possession of the U.S. health care system -- lock, stock and rate increase. Politically, they own it all.

Wait. Rate increase? Oops. All that stuff about "bending the cost curve down?" Never mind.

Earlier this month, several health insurers began announcing premium increases, and to the acute discomfort of the Obama administration, they laid part of the blame on the health care bill.

That drew an ominous letter from Health and Human Services Secretary Kathleen Sebelius. As she wrote to the large-insurer group AHIP, or America's Health Insurance Plans: "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."

Sebelius said companies that unjustifiably jack up rates may find themselves locked out of the health insurance exchanges that will be set up in 2014. Since exchanges are expected to serve as the primary marketplace for individual and small-group plans, a lockout could mean a death sentence for blacklisted firms.

In other words, Sebelius issued the sort of heavy-handed governmental threat you read about in Third World countries.

Never mind that under the health care bill, companies must soon broaden coverage significantly. For example, children can remain on their parents' plans until age 26. Children up to age 19 must be accepted by insurers regardless of preexisting conditions. Patients won't be charged copays for preventive care. And lifetime limits on policies will end.

It's absurd for the administration to pretend those changes won't result in increased risk for insurers, which has to be covered by premiums.

"This is a refusal to accept the economic reality of what she [Sebelius] and the president have caused," said Cary Hall, president of Benefits by Design, an insurance broker in Overland Park, Kan. "You cannot expect insurance companies to do these things and not see premium increases."

In her letter, Sebelius asserted that premium increases should be minimal, citing administration estimates and the work of "some" industry and academic experts. The Urban Institute, she said, projected rate increases at 1 to 2 percent.

But what may (or may not) work out for an industry average won't necessarily apply to particular plans.

Large-group plans aren't expected to be affected much. The rate hikes that drew the administration's ire, however, were for individual and small-group plans, for which premiums vary widely.

Sebelius' threat to require "state or federal review of all potentially unreasonable rate increases filed by health insurers" was astonishing. How are insurers supposed to know ahead of time what's "unreasonable," given that HHS hasn't yet issued a regulatory definition, which it is supposed to do under the law?

President Obama promised that the health care bill would lower rates. But now that the bill has been passed, he's telling a different story. In his recent press conference, he said: "As a consequence of us getting 30 million additional people on health care, at the margins that's going to increase our costs. We knew that."

Undoubtedly, they did. But they didn't say that. They said the opposite. Now that economic reality is asserting itself, they're issuing threats.

It's no surprise that with only a few weeks remaining before the election, Democrats are running as fast as they can from their handiwork. Politico reports that since April, not one Democrat has run an ad bragging about Obamacare.

Success, they say, has a thousand fathers. It's startling that in less than six months, the health care bill has been orphaned by its own creators.