Health and Human Secretary Kathleen Sebelius panned insurers for reaping billions of dollars in profits while requesting double-digit rate hikes of consumers in states such as Maine, "Consumers who have no affordable options and no way to avoid the kind of rate increases that they're seeing," Sebelius says.
Sebelius says that the administration first focused on California, where customers who buy individual policies from Anthem Blue Cross have shown outrage over a proposed 39 percent rate increase.
But then she says the administration started to hear from states such as Maine, where Anthem wants to raise rates in the individual market it dominates by 23 percent. It would affect about 18,000 policyholders and their dependents.
"I've certainly heard about the Maine rates from your congressional delegation for health insurance, the limited choices that Mainers have for health insurance. What I was not as aware of until our office pulled together some data was that the prices would be even higher if the insurance commissioner in Maine hadn't taken some action to deny some of the increases, only to have the companies turn right around and ask for more."
Sebelius says that one of the things that health reform would do is require insurers to report how they spend their premium dollars, and return money if they spend too much on administrative overhead. She points out that all the scrutiny on Anthem in California has led to a postponement of the rate hike.
The insurance industry maintains that rate increases are necessary to keep up with the rise in health care costs. "Not only do health care services cost more but we're using more and more of it each year. And that's a nationwide phenomenon," says Chris Dugan, Anthem's spokesman in Maine, where he says there are additional costs.
"The Northeast has higher health care costs overall and then in Maine, it's even a little bit higher that that. Maine has a slightly older population which utilizes more resources, and has a very high mix of federal payors, like Medicaid and Medicaid. When Medicare and Medicaid aren't able to pay the full health care dollar for hospital services, it winds up being shifted onto the private insurer, which is where the premiums are rising."
This is not the first time Anthem has requested a double-digit incease. It is awaiting a judge's ruling on a 2009 rate request for 18 percent. Maine Insurance Superintendent Mila Kofman had knocked down the increase to 11 percent.
The rate hike requests are also being noticed by some Republicans in Congress. "I am aware of the enormous rate increases that some insurers are seeking and that's very troubling," says Maine U.S. Sen. Susan Collins, who, as a moderate Republican, is being courted by the White House for support on health care reform.
"And it just points out the need for reform to restrain health care costs, which are driving up rates, but also for insurance reform so that there is more competition in the insurance market so that small businesses and individuals purchasing insurance in our state have more choices."
Collins says she is in favor of small business purchasing groups, but is also receptive to the health insurance exchange that the White House is advocating as a marketplace for consumers to shop for affordable policies.
"What has been lost in all the bitter partisanship and rhetoric concerning the health care debate is that there are many provisions of reform that have widespread support on both sides of the aisle," Collins says.
Collins says a health care bill could be passed within two months. Leading up to the summit, the White House says it will post its health care proposal online by Monday,
Monday is also the date of a public hearing in Portland on proposed rate increases by Anthem, and another insurer, MEGA Life and Health. Another hearing for both companies' rate requests will take place Wednesday in Bangor.