In an effort to get its healthcare reform legislation back on track, the Obama administration today issued a report maintaining that insurer premiums will continue to skyrocket without reform.
America's Health Insurance Plans reacted swiftly.
"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," said Karen Ignagni, AHIP president and CEO.
The comments by the administration and AHIP followed an announcement by the parent of Anthem Blue Cross of California that its individual market premiums would rise by as much as 39% 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 administration's report said. "This shocking increase isn't unique."
The report cited Sandy Praeger, Kansas Insurance Commissioner and chair of the National Association of Insurance Commissioners' health insurance and managed care committee, who has predicted rate increases of 20%, 25% or 30% in the near future.
The report, issued by the U.S. Department of Health and Human Services, said the CEOs of America's 5 largest health insurers were each compensated up to $24 million in 2008.
In defending the industry, Ignagni 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."
If reform doesn't address these pieces, it will not solve the serious problems that individuals, families and employers face, she said.
"That is why health plans have proposed fundamental reform of health insurance markets and a long-term strategy to reduce rising health care costs," Ignagni said.
She argued that premiums are increasing in the individual health insurance market because of soaring medical costs and because younger and healthier people are dropping their coverage due to the economy.
She cited a report from HHS's Centers for Medicare and Medicaid Services released Jan. 5 that found rising costs for hospitals, physicians, and prescription drugs led in 2009 to the largest growth in health care spending as a share of gross domestic product since the government started keeping track of those costs 50 years ago.
At the same time, "the portion of premiums that went towards health plans' administrative costs and profits declined for the second year in a row," Ignagni said.
Meanwhile, another industry group said the proposed Anthem rate hike proved there was a strong need for improved health care costs controls.
"This is another example of how cost containment needs to be the foundation of reform legislation," stated Joel Kopperud, a director of government relations at the Council of Insurance Agents and Brokers.
Such controls 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," Kopperud said.
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