Obama Cites Calif. Increases As Reason For Health Care Reform

NU Online News Service, Feb.18, 3:22 p.m. EST

WASHINGTON–The Obama administration, launching an effort to get its health care reform legislation back on track, issued a report indicating that without changes health insurance premiums will continue to skyrocket.

America's Health Insurance Plans responded by saying, "It's time to stop the politics of vilification and focus on what Americans need most: real health care reform that addresses the serious and urgent problems facing our nation."

The report's comments on premium increases were based on statements issued by the parent of Anthem Blue Cross of California that its individual market premiums would rise by as much as 39 percent in the coming months.

"Leading experts have predicted that, without reform, these increases will continue, and the federal government and most states don't have the legal authority to block or reduce health insurance rate increases," the report said.

"This shocking increase isn't unique," the report said.

Across the country, it noted, "families have seen their premiums skyrocket in recent years, and experts predict these increases will continue."

It added that, "Sandy Praeger, a leader of the National Association of Insurance Commissioners, predicts that we will "see rate increases of 20, 25, 30 percent."

Ms. Praeger is former president of the NAIC and current Kansas insurance commissioner.

The report, issued by the Department of Health and Human Services, said that its studies indicate that the CEOs of America's five largest health insurers were each compensated up to $24 million in 2008.

The report was released at a press conference given by Katherine Sebelius, HHS secretary.

In defending the industry, Karen Ignagni, president and CEO of AHIP, said that increases in the cost of coverage in the individual market "shine a spotlight on the urgent need to reduce the growth of underlying medical costs and to bring everyone into the system."

She said that if reform doesn't address these pieces, it will not solve the serious problems that individuals, families, and employers face.

"That is why health plans have proposed fundamental reform of health insurance markets and a long-term strategy to reduce rising health care costs," Ms. Ignagni said.

She said that health insurance premiums are increasing in the individual market because of soaring medical costs and because younger and healthier people are dropping their coverage due to the economy.

Joel Kopperud, a director of government relations at the Council of Insurance Agents and Brokers, added that, "This is another example of how cost containment needs to be the foundation of reform legislation."

Specifically, Kopperud said, these must include "having a strong, enforceable mandate that creates a large enough pool to adequately cover the costs associated with insurance market reforms – one of the key drivers behind the California insurer's rate increase."