Hi again folks,
As you know, I recently wrote a post here about how health care reform will protect patients’ rights. I read all of your comments and wanted to join in the conversation.
A number of readers shared news of their insurance rates increasing this year. I share this concern, and part of the reason we passed the Affordable Care Act was to finally bring unjustified insurance rate hikes under control by expanding insurance oversight. Unfortunately, insurance rate hikes aren’t a new problem brought on by the Affordable Care Act.
Millions of Americans, including many of you who are reading this blog, have struggled to deal with rising health insurance premiums for decades. For small business owners, you may have faced the tough decision of continuing benefits for your employees or no longer offering health insurance. For others, you may have had your health plan benefits changed and reduced, or your employer may have switched health insurance companies, or not offered raises in order to pay the higher rates dictated by insurance firms. For families or individuals buying your own insurance, you’ve seen first-hand how offerings have changed, rates have sky-rocketed and your options have dwindled as prices have risen. Most significantly, these out of control costs left many Americans uninsured over the course of the last two decades.
Insurance premiums have risen at the same time that insurance companies have been reporting record profits. Between 2000 and 2009, the profits for the ten largest health insurance companies in the nation rose 250 percent. In 2009, the House Ways and Means Committee prepared the following table about insurance company profits:
|Company||1st Half 2010 Profits||1st Half 2009 Profits||Change in Profits||Chief Executive Officer (CEO) Pay (2009)|
|United Healthcare||$2.31 billion||$1.84 billion||+25.6 percent||$8.90 million|
|Wellpoint||$1.60 billion||$1.27 billion||+25.5 percent||$13.11 million|
|Aetna||$1.05 billion||$784 million||+34.3 percent||$18.16 million|
|Humana||$599 million||$487 million||+22.8 percent||$6.51 million|
|Coventry||$98 million||$63 million||+57.1 percent||$25.65 million|
Sources: Second quarter earnings reports for UnitedHealthcare, Wellpoint, Aetna, Humana, Coventry, US Securities and Exchange Commission Filings. *CEO Pay does not include stock options
What we have is a long-term pattern of increased rates, and increased profits for insurance companies at the expense of Americans seeking healthcare. As the 111th Congress convened in 2008, it had become clear that insurance companies were going to keep increasing rates with abandon unless we took action. This pattern is an important reason we in Congress passed health care reform.
Do health insurance reforms add cost for insurance companies? The answer is “not enough to justify double-digit rate hikes”. As we’re seeing now, the US Department of Health and Human Services, along with numerous independent groups, have found that changes mandated by the Affordable Care Act will increase costs by 1 to 2 percent at most this year. If insurance companies were raising rates solely to address changes to the law under the Affordable Care Act, double digit rate hikes would not be necessary.
Because the Affordable Care Act adds very little to the cost of health insurance, health insurance companies have chosen to exaggerate the impact of the reforms in order to justify their continued rate hikes in this dire economic environment. State regulatory agencies, including in my home state of New York, are finding actual examples of this false blame game, and have called on insurance companies to stop their deceptive practices. On September 23rd, the New York State Insurance Department issued a letter to health insurance CEOs telling them that rate increase notices to consumers have been “deficient, if not misleading”.
Because of the Affordable Care Act, governments and government agencies, such as the New York State Insurance Department, have received the necessary funding and authority to stop unjustified rate hikes. In New York, the Insurance Department utilized money received from the Affordable Care Act to rigorously enforce a prior approval law and stop unjustified rate hikes on consumers. On October 12, 2010 and again on October 29, 2010, the New York State Insurance Department announced a series of cuts to proposed rate increases, in one instance bringing down a requested rate increase of 15.9 percent to 6.3 percent. Said Commissioner Wrynn:
"Because of prior approval, we were able to reduce some rate increase requests significantly – including reductions of about 16 percent," Wrynn said. "We certainly are not happy with even the reduced increases, and we will keep working to keep costs down. But at least we could make sure these increases were justified by the rising cost of health care in New York. We reduced every rate increase request that we found excessive or unreasonable."
New York received the money for this type of review process from an important component of the Affordable Care Act which has provided $46 million to 45 states and the District of Columbia to crack down on unreasonable rate hikes. This money is allowing states like New York to increase the tools at their disposal to ensure rate hikes are justified.
There is also money allocated to states to specifically help consumers fight any attempts by insurance companies to control their healthcare options or raise their rates. For example:
• Connecticut will be conducting multiple outreach sessions around the state to educate consumers about their healthcare rights.
• California will develop a consumer-friendly website and toll-free phone number that consumers can call with questions about health care coverage and receive assistance with the filing of complaints and appeals.
• New York will provide consumer assistance to at least 8,000 New Yorkers with their enrollment in coverage and/or their navigation and disputes with insurance carriers.
• North Carolina will add staff who will coordinate and deliver services needed by consumers as they transition to new health insurance programs.
These are just a sampling of the programs being put in place by states to help consumers. For more information, please visit healthcare.gov for specific details about programs in your state.
In addition to assisting states, the Affordable Care Act also allows the federal government to have more involvement in the rate review process. In a letter sent to Karen Ignagni, President and CEO of America’s Health Insurance Plans, Secretary of the US Department of Health and Human Services, Kathleen Sebelius, described new enforcement measures aimed at health insurance companies that will take affect this year. Said Secretary Sebelius:
Later this fall, we will issue a regulation that will require state or federal review of all potentially unreasonable rate increases filed by health insurers, with the justification for increases posted publicly for consumers and employers. We will also keep track of insurers with a record of unjustified rate increases: those plans may be excluded from health insurance Exchanges in 2014. Simply stated, we will not stand idly by as insurers blame their premium hikes and increased profits on the requirement that they provide consumers with basic protections.
Finally, the Justice Department filed a lawsuit against Blue Cross and Blue Shield of Michigan charging the insurance company with unfair practices. While not part of the Affordable Care Act, this action is evidence of the ongoing efforts of the Obama Administration to more vigorously protect consumers against insurance company schemes.
Unfortunately because of the rising costs of providing care, some rates will rise as we continue to try to bend the cost curve. We won’t be able to stop the rising costs of healthcare overnight, but the Affordable Care Act is the biggest step to date in bending the cost curve and stopping the egregious unjustified double-digit rate increases seen to date.
While the Affordable Care Act was under consideration, Harvard economist David Cutler said, “Over the past year of debate, 10 broad ideas have been offered for bending the health-care cost curve. The Democrats' proposed legislation incorporates virtually every one of them.” For example:
• Health care reform will expand ‘bundled paying’ and ‘valued-based payment’ in which health care providers are paid for outcomes, rather than the number of procedures.
• It will test the effectiveness of payment bundling across the nation in a wide array of settings so we can learn the best way to bundle payments to encourage efficiency and improve quality.
• Investing in information technology in hospitals and at doctors’ offices will save billions of dollars, while expanding coordination and improving quality.
• By fighting Medicare fraud, we’ll cut health care costs even more.
These reforms, in addition to the protections against health insurance companies, hold the promise of lower costs and more secure care. Yet, in order for these reforms to be effective, we need your help. If you are concerned about an increase in your rates, there are some important steps you can take. If you have received a notice of an insurance rate hike, call your State Insurance Commissioner. You can also see if there are cheaper options in your area on the new healthcare.gov website (http://www.healthcare.gov/) If you have questions about provisions of the Affordable Care Act, the Patient’s Bill of Rights, or other measures that can save you money, call your Member of Congress for more information, and explore tools such as this video by the nonpartisan Kaiser Family Foundation to learn more about particular details about the law.
As we approach the beginning of the 112th Congress, we know that we’ve taken the first step, not the last. Legislation is a tool, but it is not a cure all. When we write and pass legislation, we want to make sure that it works for you. Stay active, stay vigilant, and stay in touch with me and your respective Member of Congress to make sure that we can deliver the affordable secure care you need and deserve.