NU Online News Service, March 4, 3:38 p.m.EST

WASHINGTON–Health insurance premiums are driven byhealth care costs that must be addressed before premiums can bebrought under control, health care industry executives told thePresident today.

They made their point at a White House meeting attended byPresident Obama, other administration officials and state insuranceregulators.

The executives were responding to a request by Health and HumanServices Secretary Kathleen Sebelius to post on the Internet thejustification for their requests for large rate hikes.

Wellpoint has been under particular scrutiny, since its AnthemBlue Cross subsidiary in California recently announced plans toboost individual insurance premiums in California by as much as 39percent.

These requests for high increases, up to 39 percent, are aimedprimarily at the small and individual markets.

At the meeting, in comments via conference call after themeeting, and in a letter sent by their trade group, American HealthInsurance Plans, the company's chief executives also cautioned thatrestraining the cost of health insurance premiums without workingto control costs would impact the solvency of the companies.

Angela Braly, chairman, president and CEO of WellPoint Inc.,said during the conference call that she stated during the meeting"that the administration must understand that rates can't be lookedat independently from what the drivers of increases in health carecosts are."

Officials of Aetna and Cigna also attended the meeting.

"You can't limit rate increases and not look at underlyingcosts," said Ms. Braley. "If you don't have the right rates, youwill also have a problem with the solvency of health insurers" notonly now, "but in the future."

Ms. Braly and Stephen Hemsley, president and CEO of UnitedHealth care, noted that these costs are driven by the hospitals,the pharmaceutical industry and the medical device industry, all ofwhich have higher profit margins than the 2.2 percent profit rateearned by health insurers last year.

"We think we got those attending the meeting to acknowledge thatfact," Mr. Helmsley said.

In a letter sent to Ms. Sebelius yesterday, Karen Ignagni,president and CEO of AHP, cited Yahoo! Finance's latestanalysis of quarterly financial data, which "shows the averageprofit margin in the health insurance industry is 3.4 percent,compared to 11 percent for the entire health care sector."

At the meeting, Ms. Sebelius told the executives that the kindof rate increase Anthem asked for is "just unacceptable andunsustainable."

She said the industry is "making healthy profits," something theindustry executives disputed.

She added that, "At least the bright spotlight may help todiscourage some of these wildly exorbitant increases fromoccurring."

During a short stay at the meeting, the President underscoredthe point that such rate hikes can't go on forever. The presidenthas painted a bleak picture of spiraling costs and eroding coverageif Congress fails to pass his plan.

In their comments during the conference call, Ms. Bray and Mr.Helmsley took note of the proposed Federal Rate Review Board thatthe administration wants to set up that would have the authority toroll back high rate increases.

"Health care is very local," Mr. Helmsley said. State regulatorsare in the best position to "strike the appropriate balance betweensolvency and actuarially sound rates," he advised.

Moreover, he said, "state regulators are in a better position to"focus on consumer protection."

But state regulators attending the meeting supported the idea ofa Federal Rate Review Board, which they said is aimed only atproviding authority to state regulators who don't have a legalmandate to act to reduce high rate increases.

"State regulators are best positioned to perform rate review andmany of us do so with great success," said Jane L. Cline, NAICpresident and West Virginia Insurance Commissioner.

"Some, however, have not been given the authority by their statelegislatures to review and deny unjustified increases," Ms. Clinesaid.

"We believe that a federal backstop could help encourage theselegislatures to provide that authority," she said.