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Sebelius To Health Carriers: Explain Your Rates

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WASHINGTON BUREAU — Obama administration officials are asking 5 large insurers to publicly disclose their reasons for imposing large rate increases on some customers.

Health and Human Services Secretary Kathleen Sebelius has sent the insurers letters asking them “publicly justify” the price increases.

The letter went to the chief executive officers of UnitedHealth Group Inc., Minnetonka, Minn. (NYSE:UNH); WellPoint Inc., Indianapolis (NYSE:WLP); Aetna Inc., Hartford (NYSE:AET); Health Care Service Corp., Chicago; and CIGNA HealthCare, a unit of CIGNA Corp., Philadelphia (NYSE:CI).

Sebelius met in the White House with the CEOs Thursday.

“Last Thursday, I asked CEOs to post online the actuarial justification for premium hikes so consumers can see why their premiums are skyrocketing,” Sebelius writes in the letter.

Now, “it’s time for these insurance company CEOs to do their part to make the system more transparent for the American people,” Sebelius writes. “If insurance companies are going to raise rates, the least they can do is tell us why.”

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.


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