Obama warns health insurers over rate hikes

Health insurance companies have figured out a manipulative strategy for protecting their profit margins in the face of the new health insurance law. They are already planning big hikes before the law takes effect. Then, conveniently, they’ll blame the rate hates on health care reform. Pretty sweet, huh?
President Obama has already called them on it, according to The WaPo:

President Obama met with the chief executives of more than a dozen major insurance companies at the White House on Tuesday to caution them against using new requirements in the recently enacted health-care reform legislation as a pretext to substantially raise premiums. “There are genuine cost drivers that are not caused by insurance companies. But what is also true is that we’ve got to make sure this new law is not being used as an excuse to simply drive up costs,” the president said in a brief speech afterward. “The CEOs here today need to know that they’re going to be required to justify unreasonable premium increases.”

Karen Ignagni, president of the trade association America’s Health Insurance Plans, said she and other industry representatives found the meeting to be a “very constructive” opportunity to make the case that the main cause of rising premiums is not industry greed but recessionary pressures and increasing medical and drug costs.

“For instance, in the small employer and individual market, the economy is causing younger, healthier people to drop coverage, which means that the costs of the [remaining] risk pool is higher because it’s older and sicker,” she said.

Insurers have already been busy raising their rates, according to The NYT:

The White House meeting coincides with Monday’s release of a survey by the Kaiser Family Foundation, a nonprofit health policy research group, that found that premiums for the policies most recently bought by individuals had increased by an average of 20 percent.

“The survey shows that the steep increases we have been reading about over the last several months are not just extreme cases,” said Drew Altman, the foundation’s president.

Mr. Obama’s message to insurers will serve to put the industry on notice and position the White House politically should voters start to link premium increases to the new law. With the law expected to play a significant role in the midterm elections, the president has been using his platform to sell the bill’s most immediate benefits and, by extension, to defend Democrats in Congress who risked their careers to vote for it.

And, Ignagni’s excuse notwithstanding, a new report, sponsored by a coalition of supporters of health care reform, sharply criticized health insurers for hiking their premiums far beyond the rate of medical inflation:

The health insurance industry argues that rising medical costs are to blame for runaway premiums, but it’s clear that they are constantly looking for excuses to raise rates and expand their cash flows. As UnitedHealth said in a formal statement to its investors and analysts, “We run our businesses to produce cash.”25 The industry’s latest campaign against the new law continues its effort to preserve the status quo and expand profits on the backs of average Americans. Premium hikes have surpassed the growth of medical costs, wages and overall inflation (Figures 1 and 2). From 2000 to 2008, premiums for families enrolled in employer- sponsored health plans increased 97 percent, while rates for individuals in workplace health plans climbed 90 percent.26 During that same period, private insurers’ payments to health care providers rose only 72 percent,27 medical inflation increased 39 percent,28 wages grew 29 percent29 and overall inflation climbed 21 percent.30 Health insurers are basing increases on something other than medical inflation, wages or general inflation.

While premiums have been rising faster than inflation, insurers have decreased the portion of premium dollars spent on actual health care services. This is measured by a closely watched indicator known on Wall Street as the medical loss ratio (MLR), and it has been falling as the share devoted to profits, executive pay, marketing, administration, denial of claims and exclusion of sick people has climbed. In 1993, the leading health insurers used about 95 cents of every premium dollar on health care.31 After years of mergers and acquisitions that put much of the U.S. population under the control of a handful of insurers whose shares are traded on Wall Street, that indicator dropped. Investor-owned health insurers have cut spending on actual medical care to around 81 percent.32 For the five largest health insurers, the difference between 81 and 95 percent of premiums in 2009 would equal about $25 billion.33

184 comments Add your comment

Peadawg

June 23rd, 2010
1:50 pm

They have to do something in order to cover 30 million new people. Obama and Pelosi should have thought about this before. They can’t expect insurance companies to all of a sudden pick up all these new people and not raise prices on everyone.

SP

June 23rd, 2010
1:50 pm

Looks like the copy and paste didn’t work well this time.

Peadawg

June 23rd, 2010
1:51 pm

Off topic but good news non-the-less:
ttp://www.ajc.com/news/atlanta/witnesses-back-off-testimony-555778.html
“Witnesses back off testimony against Troy Davis
Four witnesses who testified against Troy Anthony Davis at his 1991 trial said Wednesday that none of their damaging testimony against him was true.”

Granny Godzilla

June 23rd, 2010
1:55 pm

I see approval for HCR is inching up.

Peadawg

June 23rd, 2010
1:57 pm

“I see approval for HCR is inching up.”

I find it hard to believe people support this bill that is going to cause insurance prices to go up. It’ll be interesting to see the polls in January.

Cynthia is Sexy!!

June 23rd, 2010
2:03 pm

I hope Insurance costs go thru the roof via the Hcare providers. It will further illustrate just what a jackass Obama is.

Cynthia is Sexy!!

June 23rd, 2010
2:06 pm

“They have to do something in order to cover 30 million new people. Obama and Pelosi should have thought about this before.”

EXACTLY!!!

Ya just cant add 30 million people to the payroll, the HDTV customer base, without raising rates.

Go HCare providers…screw over the govt and show what true fools they are.

Reality

June 23rd, 2010
2:08 pm

So let me get this straight, Obama is warned that his bill will increase rates, then he passes said bill, then rates start to go up, then Obama blames the insurance companies? Right. What did you think would happen when you added millions of people who didn’t have insurance?

Granny Godzilla

June 23rd, 2010
2:09 pm

HC Providers or US

Not really a tough choice.

Cynthia is Sexy!!

June 23rd, 2010
2:09 pm

Obama isnt gonna raise your taxes but he will see to it your benefits are cut and your prices are increased. Then we will hear “Those evil insurance carriers did it…not me…”

Jimmy62

June 23rd, 2010
2:10 pm

If Obama is causing costs to increase for the insurance companies then they should darn well raise their rates. Or do companies no longer have a right to profit on their business?

Ironic that this column, all about Obama dictating to private corporations how they should run their business, came out the same day as Bookman is denying any sort of move to dictatorship from Obama.

Cynthia is Sexy!!

June 23rd, 2010
2:10 pm

“Not really a tough choice”

Not for fools, idiots and the lazy.

Cynthia is Sexy!!

June 23rd, 2010
2:14 pm

“The health insurance industry argues that rising medical costs are to blame for runaway premiums, but it’s clear that they are constantly looking for excuses to raise rates and expand their cash flows.”

So profit is now another great evil! Oh yes…as The HildaBeast foamed at the mouth…”Excess Profits”.

What a great setup for the Republicans to be whisked back into power!!

Thanks Obi!!

Granny Godzilla

June 23rd, 2010
2:16 pm

“Not really a tough choice”

Not for fools, idiots and the lazy.”

ANd which group, praytell CIS, are you in?

t

June 23rd, 2010
2:20 pm

This really is like something out of Atlas Shrugged. The government passes all these laws to “help the people” and regulate “evil businesses” and when things get worse, instead of realizing it was their dumb policies, they ask for more government intrusion. When the republicans get Congress back whether it be in november or in 2012, no less than full repeal will be acceptable. then pass reforms that all dems and reps agree on for starters.

Cynthia is Sexy!!

June 23rd, 2010
2:21 pm

I dont think Obama can stop the Ins Companies from a rate increase and or a benefits cut.

The carriers should play it smart and also eliminate any deductibles under $1000 while raising rates…lol.

Granny Godzilla

June 23rd, 2010
2:24 pm

t

you are going to be a real unhappy camper if a complete repeal is what you’re wishing for.

GOP reps are starting to quietly back away from that idea….

Cynthia is Sexy!!

June 23rd, 2010
2:25 pm

Whats OBlunder gonna do when a majority of the young and “poor” opt out of the program and accept paying the fine? That will only help to drive HCare costs/rates up further.

Malcom

June 23rd, 2010
2:25 pm

But no one nationalized health care. It’s just that Obama has to approve price changes now. What a royal mess this clown has made.

Joe

June 23rd, 2010
2:26 pm

Budget Director…gone…little tough boy rahm- soon gone….off shore drilling…over turned….Arizona law that follows federal…ready to fight empty headed AG…general…gone…..the smoke and mirror administration is now simply the house of cards. you simply can’t fool all the people of the time. Some day the libs will understand that what they are doing is really hurting the poor. It may taste good and provide that nice buzz but the hangover is brutal.

Peadawg

June 23rd, 2010
2:27 pm

ttp://me414.files.wordpress.com/2009/12/obama-clown-movie.gif

Gotta love it!

Union

June 23rd, 2010
2:29 pm

but but but.. obama said everything was gonna cost less? wtf

Moderate Line

June 23rd, 2010
2:29 pm

I glad to see Obama is concentrating on .11% of spending.

Cynthia is Sexy!!

June 23rd, 2010
2:30 pm

This is like watching a sad yet hilarious comedy unfold. OBlunder just steps from one smelly pile to the next more smelly pile. Breaking promise after promise. The military still overseas. The World Apology tour. The silly Beer summit in which just prior he exhibited his bigotry or stupidity at the very least. His mis-handling of the oil leak mess. That silly little pep talk speech he gave that was written at a level of that less then a 10th grader (I guess his majority of constituents needed to be able to understand).

The Republicans couldnt have asked for a better situation…LMAO!!

obama's fault

June 23rd, 2010
2:31 pm

All we need is a change in Congress and then the new Congress can just pull the funding. No need to try to repeal the law….just pull the funding. It is so easy.

Union

June 23rd, 2010
2:33 pm

dems at work..victory!!!

Senate OKs lower debit card fees, pay-method discounts -
WASHINGTON, D.C. — Striking at a lucrative bank business, the Senate on Thursday voted to force credit card companies to reduce fees for debit card transactions and permit merchants to offer customer discounts based on their payment method.
The 64-33 vote inserted the fee requirement in a package of new financial rules the Senate is considering to ward off a repeat of the financial crisis.

The vote was a major defeat for banks, which lobbied hard against it.

Union

June 23rd, 2010
2:33 pm

err maybe a loss instead?

Debit-card fee debate could cost consumers

If a proposed bill to curb merchants’ costs becomes law, consumers might find their debit cards come with new fees and less-generous reward programs.

“Financial institutions will want to recoup revenues that are being legislated away,” said Red Gillen, a senior analyst at Celent, a research and advisory firm to financial institutions.

Cynthia is Sexy!!

June 23rd, 2010
2:37 pm

“Debit-card fee debate could cost consumers”

AHHH HAHAHAHAAAAA…LMAO!!! Those banking institutions cant be out manuvered…they have all the angles figured out and these Capitol hill idiots just keep making it harder on the little guy.

Obama mad credit card rates MUCH MUCH HIGHER…LMAO!!!
Congress screws up the Debit Card market…LMAO!!!

Just keeps getting better.

PS…heres a tip. Keep your balance low and make your payments on time. Is it really that difficult to understand?

Cynthia is Sexy!!

June 23rd, 2010
2:39 pm

“The vote was a major defeat for banks, which lobbied hard against it.”

Should read…The vote was a major defeat for cardholders who will now be yet again screwed by the banking institutions thanks to Uncle Sam who will revert to the same ole tired mantra of Its not us…ITS THEM”.

AH HAHAHHAAAAA!

X2 Standard

June 23rd, 2010
2:40 pm

Not only will health care costs increase due to the number of people added to the membership rolls, these are the people that typically have health problems that couldn’t get coverage because of the expense of their health care costs. This is like flooding a class of B students with a bunch of F’s.

Cynthia is Sexy!!

June 23rd, 2010
2:42 pm

Based on what Obama/Biden have done I may call up this SC candidate Al Greene, ask him to withdraw and the two of us work on a 2012 campaign to upend team Obama.

We may not win but we certainly couldnt be anymore dumb or out of touch or stupid or or or…

MiltonMan

June 23rd, 2010
2:42 pm

This will indeed raise taxes. When you have to “shop around” for your health coverage with this nightmare of a plan you will have to pay with post-tax dollars. Employers are already sending out emails that employees will be dropped from the employer health care plan in 2012 & it is up to the individual to find their own health insurance.

Cynthia is Sexy!!

June 23rd, 2010
2:44 pm

“This is like flooding a class of B students with a bunch of F’s.”

HEY…just a darn minute. Regarding your illustration kind Sir.

Thats not FAIR!
You are mean spirited!!
We are all good.
We all are victims!!

Granny Godzilla

June 23rd, 2010
2:46 pm

It’s also possible, ladies and gentlemen, that the noise made by the insurers for a larger than required increase in rates will make
the late 2010 Public Option successful.

Squeal Insurance companies – please and raise the volume.

Granny Godzilla

June 23rd, 2010
2:47 pm

i left out the word vote……Public Option vote

obama's fault

June 23rd, 2010
2:49 pm

Here’s a question. What will happen if the Dems get their way and give amnesty to all of the illegal immigrants. Just imagine how much more the costs will go up. Another question….How come Obama is fastforwarding many of these “benefits” that were supposed to take effect a few years from now? Wouldn’t giving these benefits out early make the total cost of this reform go higher than $1 Trillion. Yet, another broken promise by this admin. Of course, nobody will know this because the same people that should be reporting on these lies are the same ones that got the people believing the benefits would start immediately.

Peadawg

June 23rd, 2010
2:51 pm

“Public Option”

No public option until they clean up Medicare, Medicaid, and SS. Why the hell would you want the gov’t to run another insurance/handout plan with all the fraud that’s out there now? Unbelievable…even for you Grandma.

Tom Middleton

June 23rd, 2010
2:52 pm

Looks like greed is still the motivating drive behind most big businesses. From Massey Energy to BP and now health insurance, Americans are continuing to pay a terrible price for allowing some companies to subordinate all things good to their bottom lines.

Profit is one thing, but this goes far beyond profit and it must be stopped. Now is no time to put a bunch of “free-market” Republicans in office to encourage and applaud even more of what keeps hurting us so badly. Houston, going backwards is not an option!

Some People are stupid

June 23rd, 2010
2:53 pm

Umm….there is a difference between rasing premiums because cost are going up and a difference to raise profit margin.

Granny Godzilla

June 23rd, 2010
2:54 pm

The Commonwealth Fund is out with a new report showing that the United States spends twice as much as any other country on health care, but still has a system with unbearably low quality, efficiency and equality standards:

From Think Progress

Yep, lame duck vote on the public option…….

ctucker

June 23rd, 2010
2:54 pm

MiltonMan, Do you mind disclosing details about your health insurance? Are you employed by a large company that negotiates for you? Are you a Medicare recipient? Do you have to purchase a policy on your own?

Some People are stupid

June 23rd, 2010
2:55 pm

I think it should be mandatory that all students take at least 2 econ classes in high school.

X2 Standard

June 23rd, 2010
3:01 pm

Some people are stupid:

That just ain’t gonna happen because the Leftist elite has diminished the conservative influence on education to nothing. Economics, by nature, is a class that teach principles based upon facts, not feelings and entitlement. Naturally, this does not jive with liberal “educators” and we continue to raise generations of increasingly under-prepared students who do not understand fundamentals like…..a budget- personal or otherwise.

PearlJam

June 23rd, 2010
3:01 pm

Sounds like something Hugo Chavez would be proud of.
I guest Health Insurance companies next option to make money is to cut cost and coverage.

Bye Bye Jobs
Bye Bye Options – you will get less coverage for your money

I'm here from the government and I'm here to help

June 23rd, 2010
3:06 pm

HELLO, McFly aka ctucker,

Told you so! DUH!!!

When you have shareholders and a BOD, you better show a profit or they will find someone else to run the company that will.

Who couldn’t see rate increases coming and baby this is just the beginning. How in the hell can any intelligent person not see that if you require an industry to cover 30 million more people and cover them and the other 300 million with UNLIMITED benefits, premiums (Now another TAX) have to be increased. This is not rocket science! Even Granny can count. :)

scrappy

June 23rd, 2010
3:06 pm

X2 standard – I think you have your cliche’s mixed up…

“That just ain’t gonna happen because the Leftist elite has diminished the conservative influence on education to nothing. Economics, by nature, is a class that teach principles based upon facts, not feelings and entitlement. ”

I think you meant the rightie’s that re-write history books and include creationism is science class. Science, ya know, a class based upon facts… Or Econ… where to the right’s assessment all ya have to do is lower taxes and jobs are created and the economy flourishes.

T-Town

June 23rd, 2010
3:07 pm

Housing sales fall 33% in May, the unemployment rate still well over 9%, losing at least one of the wars now being fought and firing his hand picked general directing this war, insurance premiums rising more than what was expected, and while certainly not his fault for causing-though many will fault his responses-the oil leak is still a big problem. The US as a whole and President Obama personally are not having a very good year and we are only in June. There are those who hope Obama falls completely on his face, but if he does he may take the rest of us down with him. Be careful what you hope for, cutting your nose off to spite your face may hurt a lot more than you may think.

Cynthia is Sexy!!

June 23rd, 2010
3:08 pm

Profit is one thing, but this goes far beyond profit and it must be stopped.

Really? Where is the dividing line…Commie.

Robert

June 23rd, 2010
3:10 pm

A light bulb moment- let’s combine the public option with the social security lockbox. That and clicking our heels- put you space suits on folks we are going to the moon!

Cynthia is Sexy!!

June 23rd, 2010
3:10 pm

T Town…Agreed. However, short term pain will be worth the long term gain instituted by the soon to be in power Republicans.