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Sebelius Blasts Health Insurance Industry

Image has not been found. URL: /wp-content/uploads/2010/03/sebelius-480x343.jpgHealth and Human Services Secretary Kathleen Sebelius (EPA/ZUMAPRESS.com)

Just two days after President Obama whacked the insurance industry for being an impediment to much-needed health care reform, Kathleen Sebelius took a second swing.

Speaking Wednesday at a national health insurance conference, the White House Health and Human Services secretary blasted the nation’s insurers for a laundry list of recent trends, including skyrocketing premiums that threaten to leave patients uncovered, industry consolidation that has squeezed patient choice, and leaping profits reported by the same companies now hiking costs on their customers.

[Congress1] A year after Obama entered the White House with a promise to tackle those very issues, “the cracks in the health care system have opened even wider,” Sebelius told hundreds of members of America’s Health Insurance Plans gathered at the Ritz-Carlton in Washington. “We’ve got to figure out a new strategy.”

The new strategy Sebelius has in mind, of course, revolves around the health reform bills currently bouncing through Congress. While both the House and Senate have passed versions of those sweeping proposals, the surprise victory of GOP Sen. Scott Brown (Mass.) in January has left the Democrats without the 60 votes they need to push a united bill through the Senate under normal rules. Democratic leaders are now hoping to tap the budget reconciliation process to move the legislation with a simple 50-member majority. Meanwhile, the process remains stalled indefinitely.

The lobbying power of the influential insurance industry would surely help get those reforms over the finish line, and Sebelius, switching gears from attack dog to lobbyist, implored AHIP members Wednesday to put their considerable weight behind the bills.

“It’s not too late to work on this together,” Sebelius said.

To win AHIP’s support, however, Democrats would have to tweak their proposals considerably. Karen Ignagni, president and CEO of AHIP, which lobbies for the nation’s largest health insurance companies, insisted that the group is behind the general concept of health care reform, but rejects the Democrats’ plans out of concern that they would “make the system more expensive, not more affordable.”

“We are very disturbed about what is happening with … underlying costs,” she said.

Ignagni said the industry wants a more sweeping individual mandate — meaning the guarantee of more customers — before it’ll sign on to the rest of the reform package, which would prohibit insurers from denying coverage for preexisting conditions or arbitrarily hiking premiums.

In one important sense, Ignagni is exactly right: The cost of delivering health care has historically grown at a rate much faster than either wages or inflation, and ever-improving medical technologies have only accelerated that trend. Indeed, the Centers for Medicare and Medicaid services reported last month that Americans spent $2.5 trillion on health care in 2009, a figure representing 17.3 percent of the nation’s economy and a jump of 1.1 percentage points from 2008 — the largest single-year leap since 1960 when the government began keeping such records. And if the cost of medical care is increasing faster than the rest of the economy, then the costs to insure that care will necessarily do the same.

“We should put affordability at the top of the agenda,” Ignagni said.

Still, the industry has done little to explain why insurance companies continue to consolidate their operations, leaving patients with fewer and fewer options in most markets. Indeed, the American Medical Association recently found that, in 24 states, just two companies control 70 percent or more of the market share. “The near total collapse of competitive and dynamic health insurance markets has not helped patients,” AMA President J. James Rohack said in a recent statement.

Nor have insurers had much luck justifying why industry profits are skyrocketing (up an average of 56 percent in 2009, by Sebelius’ math) at the same time that companies are hiking premiums in the double digits. Ignagni’s explanation that insurers “must be solvent to pay claims” likely won’t meet the approval of Sebelius, who warned that the cost hikes would only throw patients off the rolls.

“Americans are willing to pay a fair price … as long as it gives real security when someone gets sick,” Sebelius said.

The saga isn’t over. Sebelius has asked for AHIP to come to the table with changes in the Democrats’ reform proposals, and Ignagni has accepted.

The ball is now in the court of the insurers.

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