President Presses CEOs on Premium Hikes

Health insurers attend White House meeting as new regulations governing carrier behavior are revealed.

June 22, 2010

Bill Kenealy

A constellation of insurance regulators and executives were on hand at the White House for an event marking the 90-day anniversary of the signing of the Affordable Care Act.

After a closed-door meeting, President Obama spoke in the East Room. He noted that the event also coincided with the Departments of Health and Human Services, Labor and Treasury issuing new regulations that would end “some of the worst practices” in the insurance industry, including rescissions, lifetime care limits and discrimination against patients with preexisting conditions.
Despite the tough rhetoric, Obama said the new rules were not punitive. “As I said when I met with the insurance executives, it’s not meant to punish insurance companies,” Obama said. “They provide a critical service. They employ large numbers of Americans. And in fact, once this reform is fully implemented a few years from now, America’s private insurance companies have the opportunity to prosper from the opportunity to compete for tens of millions of new customers. We want them to take advantage of that competition.”

Obama also said the government would keep an eye on premium increases, citing an attempt by Indianapolis-based Anthem Blue Cross to raise premiums. “Earlier this year, for example, more than 800,000 Anthem Blue Cross customers in California opened their mail to see that their premiums would go up by as much as 39%,” Obama said. “My administration wanted to know why. And when pressed, they took a look at it and said, well, our math was wrong; we didn’t justify that kind of rate increase. So they withdrew it.”
Still, Obama acknowledged that there are genuine cost-drivers that are not caused by health insurers. “None of this is designed to deprive insurance companies of fair rates,” he said. “And as I mentioned when we were meeting with the CEOs, there are a lot of cost-drivers other than those that are within insurance companies’ control. But it is important to have these steps in places to protect consumers from unjustifiable rate increases.”

Blue Cross and Blue Shield Association President and CEO Scott Serota attended the meeting and said the association made several recommendations on how to take a pragmatic approach to implementation to minimize additional costs. "Underlying health care costs and current economic conditions are driving increases in health insurance premiums,” Serota said in a statement. “We have a range of initiatives underway to rein in costs and improve quality, and we know more needs to be done to address rising hospital, prescription drug and other costs. With respect to the new insurance reform rules that become effective this year, these rules have the potential to add costs to what we're already experiencing today. The magnitude of these increases will depend on the specifics of the rules.”

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