Federal regulators plan to order government reviews of all "potentially unreasonable" insurance premium increases under a forthcoming rule this fall and publicly disclose the insurers' responses to the inquiries, HHS Secretary Kathleen Sebelius said.
Sebelius to insurers: 'Zero tolerance' for misinformation
In a two-page letter to industry trade group America's Health Insurance Plans on Thursday, Sebelius said insurers have been falsely telling their members that the reforms contained in the Patient Protection and Affordable Care Act will cause premium increases in 2011. Sebelius warned the insurers that the administration will have “zero tolerance” for misinformation.
"Simply stated, we will not stand idly by as insurers blame their premium hikes and increased profits on the requirement that they provide consumers with basic protections," Sebelius wrote.
HHS will issue a regulation this fall that will order reviews of questionable rate increases by either state or federal officials. Any insurer that shows a record of imposing unjustified rate increases could be frozen out of the federally mandated health insurance exchanges that are scheduled to start operating in 2014, the secretary wrote.
In a written response, AHIP President and CEO Karen Ignagni said the additional benefits mandated under the healthcare reform law, along with the soaring cost of medical care and the declining number of premium-paying enrollees, are to blame for the rate increases.
Despite Sebelius' arguments that the savings in the healthcare reform law would offset any increased costs, Ignagni said the law mandates providing services beyond what many insurance policyholders purchase today. "It's a basic law of economics that additional benefits incur additional costs, and the impact on premiums depends on the type and amount of coverage policyholders had before," Ignagni wrote.
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