Sebelius To Health Carriers: Explain Your Rates

Sebelius is asking for 10 types of data, including estimates of medical cost and utilization increases, the assumptions driving these estimates, and the basis for those assumptions; explanations of any cases in which premiums increase faster than the estimated medical costs; a description of the number of people affected by the premium increases, and a breakdown of the number of affected participants by characteristics such as age, sex and plan type.

Sebelius also is asking for data on the medical loss ratios resulting from any premium increases; enrollment changes in different plans since the past year; and the number of people on whose experience the rate increase is calculated.

Sebelius sent the letters after Steve Lewis, a broker who participated in a conference call organized by Goldman Sachs, New York, suggested that competition in the insurance market is so weak that insurers can continue to raise rates even if that means losing customers.

“Price competition is down” and “incumbent carriers seem more willing than ever to walk away from existing business,” Lewis said during the conference call.

President Obama referred to the commentary today during a speech in outside Philadelphia today, and members of the House are preparing to vote on Obama’s version of the health bill, which is based mainly on a health bill that the Senate passed in December.