Round 3: HHS Takes on Insurers

Photo courtesy of Flickr Creative Commons user km6xo.

The Democrats are absolutely hammering the insurance industry. Earlier today, Health and Human Services Secretary Kathleen Sebelius held a press conference to release a report taking the insurance industry to task for proposed double-digit rate increases (some of which were rejected by state insurance commissioners). The report won’t take long to read. It’s only about 5 pages and a good portion is devoted to singing the praises of the Obama health reform plan. The report also takes a shot at insurance companies for raising rates even as they rake in profits. Here’s what the report says on that:

“Recent economic data show that profits for the ten largest insurance companies increased 250 percent between 2000 and 2009, ten times faster than inflation. Last year, as working families struggled with rising health care costs and a recession, the five largest health insurance companies– Wellpoint, UnitedHealthGroup, Cigna, Aetna, and Humana– took in combined profits of $12.2 billion, up 56 percent over 2008. These health insurance companies’ profits grew even as nominal GDP decreased by 1 percent over this same time period. Wellpoint accumulated more than $2.7 billion in profits in the most recent quarter alone.”

This rhetoric should sound familiar if you’ve been paying attention for the last couple of weeks. Ms. Sebelius recently had a very public slugfest with Anthem Blue Cross of California and its parent company Wellpoint over their planned rate increases. The insurer has since delayed its plan for a couple of months. You can read more about that here and here.

The insurance industry has a story to tell too, though. America’s Health Insurance Plans, the organization that represents the insurance industry, is calling Ms. Sebelius’s tactics “the politics of vilification.” And AHIP is disputing the charges point by point. According to AHIP, insurers aren’t making outrageous profits. Health plan profits are only about 2.2%, putting it only 35th on the Fortume 500 list of profits by industry sector. They also contend that health plans are working to bring down administrative costs and are having some moderate success. Health plan administrative costs were 12.8% in 2006 and 11.7% in 2008, according to National Health Expenditure Accounts.

Only time will tell if this recent back-and-forth between the Democrats and the insurance industry will move anything forward on health reform.

— Mary Ellen Schneider (on Twitter @MaryEllenNY)

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Filed under Health Policy, health reform, IMNG, Practice Trends, Uncategorized

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