Human Resources News & Insights

Washington warns health insurers: ‘Don’t jack up rates’

Insurance companies are not only raising rates considerably, they’re blaming the increases on the healthcare reform law — a move the Obama administration isn’t happy with.

Last week, The Wall Street Journal reported that some insurance companies hiked up their premiums nearly 20% in September — and blamed some of the increases on the mandates of the health reform law.

The Obama administration’s response: Those who enact “unjustified” rate hikes linked to the Patient Protection and Affordable Care Act (PPACA) will be blocked from the new state-run insurance exchanges.

Millions of people are expected to use the exchanges starting in 2014 to buy coverage.

Healthcare reform didn’t receive all of the blame for the recent rate increases. Rising premiums were also attributed to the higher price of medical services and the impact of younger, healthier people dropping coverage due to budget constraints in the tight economy.

But according to Kathleen Sebelius, secretary of Health and Human Services, some insurers have begun notifying enrollees that their premiums will increase as a result of the PPACA — an action that will not be tolerated.

Sebelius’ views are shared with a number of Democrats who are calling for stiffer premium regulations. Legislation has already been proposed that would give the federal government the power to reject unreasonable rate increases.

Do you think the government should step in and try to minimize the rate hikes imposed by insurance companies? Share your thoughts in the Comments Box below.

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  • Its my feeling that “its about time” that someone steps in to stop the insurance companies of the continual “robbing” of the public and calling it justified because of the increased cost of medicine, medical equipment, doctors fees etc. Insurance companies are jumping up and down for joy for all these years, behind closed doors naturally, praising themselves over the billions in profits and yet advertising that they are concerned about individual “affordable” healthcare insurance. It all comes down to “money” and how much they can manipulate out of the customer. Its all called “profit margin” and the insurance companies are vey sensitive to it. It is not surprising to me that some companies are “passing this on” to the customer or at least trying to. I’m glad that big business is loosing some profit just like everyone else. I appauld Kathleen Sebelius for her action and hope it continues.

  • I guess everyone can see, finally, what conservatives said would happen IS happening. Everyone refused to listen to us until it was too late…as usual.
    I love the article saying, “the obama administration has said they will not stand for this…”
    Yet they plan on doing nothing. They have said they’ll deny those insurance companies access the the exchange…
    I don’t think those companies care. The customers that would need the exchange are those that would be needing lots of expensive health care. That is not the kind of customer those companies want anyway. So the threat made by the mistake administration…sorry the obama administration is not a threat or a solution. It is, simply, another failed attempt to make right the negligence this administration is becoming noted for so quickly.

  • LEE MAR

    Aetna just raised my premium 23% ; a California resident, with no medical activity.

  • redcat

    What a joke, my small business in NYC had a raise of 25% for 2010 and just received notice 20-25% for 2011.
    Right now I’m working for health ins. Thats what I get for being responsible. This is only the beginning.
    This government will find a way to make the workers pay for the non-workers, doesn’t pay to save.
    I give up, welfare here I come. Thanks Chuck Schumer

  • Redcat: you hit the nail on the head. Its always the guys on the other end of the stick that gets messed over. When are the companies going to do the right thing. Seems like these so called insurance polices have more they dont pay for than what they will. Im with you redcat.

  • Zooey

    I cannot believe that people believe that trusting big business to do the “right thing” is in their best interest. Have we learnt nothing from the recent financial industry collapse where lack of oversight allowed greed to rule the day. If we allow the health insurance companies to determine what they want to charge and what they will pay for when we need insurance coverage we are in for a very rough road ahead. I applaud this administration for trying to do something to reign in the insurance companies and help the middle class of America have access to affordable healthcare. It’s not going to happen overnight but we have to start somewhere and I believe this is start for all of us. Don’t be arrogant to think that you will never be out of a job, get sick and need access to healthcare.

  • Karin

    so what happens to those of us who renewed with these high rate increases, will they insuranc companies be forced to reduce the rates and reimburse us?

  • MMAN

    I think the government should step in and regulate insurance premiums and gas prices. My goodness, we’re gonna have to change the concept of inflation to inhalation.

  • Cook

    It is funny to me that the White House has put this all off on insurance companies for raising rates. What did they think would happen when they do away with lifetime maximums, pre-existing conditions, and raise the age of covered dependants to the age of 26 regardless of marital or student status. (If my child is 26 and married, it’s time for them to start incurring some expenses) Of course the cost of plans will rise, when you do away with provisions that help control costs. Yes, some of the insurance cost is due to rising costs of healthcare, something the PPACA did not address. We are still going to be paying 20 dollars for that hospital Tylenol. I work in HR and we are trying to renew our annual insurance plan, but will be left with questions. A Healthcare Reform plan was passed, but to date regulations are still being written, so yes, insurance companies/ employers are all confused about the what ifs.

  • Guy

    All companies want to increase profits and market share. In a depressed economy with more workers out of a job, you can’t increase market share by raising rates with a competitor ready to pounce on that opening. Today, there are more sellers of insurance with fewer buyers.

    What I find curious is the fact that the cost of elective medical procedures, which only those with disposable income can afford, continue to decrease while the cost of basic services, with more ready customers, continues to increase. There is far less government interference in liposuction, botox, cosmetic surgery, breast augmentation and the like but the costs are more and more affordable.

    Now the government has stepped into health care and threatens to corral private industry’s right to charge what the market will bear. Even though market forces should keep prices at equilibrium as it does in so many less regulated markets. The government threatens to prevent uncooperative companies from doing business.

    Not long ago, California started to pressure insurance companies on what they considered to be excessive rates. Many of those insurance companies simply stopped quoting in the state which led to fewer competitors and less reason for the remaining companies to stabilize costs. Thus, company “A” with one or two competitors are the only “qualified” firms. In order to provide the services at the low bid quote, they are forced to cut corners. And we have no options. The cost may or may not be less after hidden taxes and fees are included, but I have no doubt services will diminish.

    Government may feel they can dictate rates. The only way that will be successful is if they can force a company to stay in business or tell them where they must do business. Otherwise, they must run the business themselves. Then we’ll all be dependent on the government from the cradle to the grave for DMV-like service and sub-standard care because there will be no incentive for anyone to expend any effort since medical practitioners will be just another government worker bee.

    I remember when a gas station attendant was on duty to check my tire pressure, oil pressure and wash my windows. The service has devolved while the percentage of the government’s tax bite included in the gas price increases unabated. I expect nothing less in my heath care services with increased government involvement – – inefficiently spent tax dollars associated with running the programs.

  • Common Sense

    HRDon, Some one as misinformed as you should stay off the comments boards. The insurance companies on average have a 5% profit margin. (This is low compared to doctors, hospitals and pharmaceutical companies). The government mandates that they need to start raising limits and provide coverage to people that were previously uninsurable. The insurance carriers “pass this on to the customer” by raising the rates accordingly and you accuse the insurance companies of robbing. This is the same as requiring home insurance carriers to offer coverage to a house after it burned to the ground. Would you be mad at home insurance company for raising their rates or would you rather that the whole industry collapse and millions of people lose their jobs?

    You say “I’m glad that big business is loosing some profit just like everyone else.”

    Spoken like a true communist. However, Even Fidel Castro has seen the errors of his ways.

  • Anthony Carollo

    I am President of a 28 employee manufacturing company in Toledo Ohio. We just received a 42%rate increase on our renewal. No specific reason was given , although the first thing that was mentioned was the new healthcare bill. Someone needs to step in and take contro of the greedy Insurance industry. Don’t tell me that the government cannot run a major program. We already have medicare and everyone I have talked that is on medicare LOVE it. Instead of the healthcare bill all they needed to do was expand medicare. Neither the company or our employees can afford this type of increas. I believe the increases over the next two years we be just as steep. They MUST be stopped.

  • Common Sense

    Anthony Carollo, Every patient loves Medicare. That does not mean it is a well-run government program. One of the major reasons private health insurance have had such dramatic increases is because Medicare does not pay a fair market value to the doctors and hospitals. These providers try to recoup their loses by charging private carriers extra.

    Despite the large discrepencies in what they need to pay, the program is still going bankrupt. These problems have been exasperated by the new reform. Doctor shortages will be the new norm.

    Once again, the believers in big government are wrong.

    P.S. I have a hard time believing you are a president of anything by the way you write and think.

  • M Brown

    Even if insurance companies became non-profit ventures, the incremental cost associated with changes mandated by PPACA is going to require significant premium increases, tax increases, or both. Moreover, until the economy improves (and that may be several years away), a significant portion of young and healthy workers will continue to opt out of health insurance due to the cost versus perceived value.

    Moreover, as baby boomers increase the number of people eligible for Medicare, the subsidy to pay for the program is going to increase, and the increase will be paid by a smaller number (in a relative sense) of taxpayers. To make up the difference, taxes will have to increase or benefits decrease. Given the number of voters receiving, or close to receiving Medicare benefits, the likelihood of a benefit reduction is almost nil.

    Our best hope is that the Supreme Court says health insurance is not universally an interstate commerce issue, if at all. This would give us a chance to implement reasonable commons sense fixes well short of what is otherwise amounts to a government take-over of health care in America.

  • Dale E

    I just went through the process of renewing health care for our company and it was a total nightmare. Most companies for a fairly healthy group wanted 26-34% increases from our current plan and deductible, including the company that we were currently using. To avoid the significant increase being passed onto our employees, we decided to raise deductibles, and the company will consider helping with the larger deductible in severe cases. It never should have had to happen though. I had been preparing for months that the increase was going to take place, however no matter what avenues I pursued we continually came back to reduced coverages and higher rates.

  • Not Surprised

    How thinking people could be surprised by the increases being quoted by insurance companies for 2011 is what is startling. There is nothing in the healthcare reform act that addresses cost. In fact, its provisions increase the cost of care at every turn. It sure sounds great to pay 100% of preventative care costs, but the cost just gets added onto the cost of premiums.

    My company was initially quoted a 76% increase with our current provider. We ended up settling on an 18% increase with another provider for 2011 and I’m happy to get it. As a company with more than 300 employees, we could have gone self-funded to control our increase fo4r 2011, but our claims have been 170% of premium dollars for the last 8 months. While the company owner is outraged with the insurance companies and the “unfair” quotes they have given us (if they were willing to quote us, and many were not), he is unwilling to have the company take the risk going the self-funded route. He even said to me that the insurance companies are bigger and can weather a couple of bad claims years than we can.

    I don’t care about anybody’s political party. You simply cannot expect to continue giving out “goodies” to everyone and think those of us doing the paying will not have to pay the price. I realize that many see healthcare as something that everyone should receive like food and shelter. What they fail to acknowledge is that we cannot all eat lobster and live in a mansion. Some get by on Ramen and live in a studio apartment because that is what they can afford. Hospitals don’t turn away patients in critical condition, but ERs don’t get the uninsured in within 15 minutes for a sore throat either. By expecting all to get the same care, we will have to decrease the care we are all getting.

    If a Medicare-style system was the answer, I’d like to see the Gov first address the $80 B in waste, fraude, and abuse they say is there that will magicaly go away with healthcare reform before they expect everyone to go “all in.”

    I am surprised each and every day by employees contacting me about their woes because so many of them truly expect the Gov to save them from all of life’s woes. Many expected to receive free healthcare by 2011. I have employees manking $25+ per hour and receiving a benefits package that provides them with medical, dental, vision, + benefits complaining because they want the cash instead of the benefits so that they don’t have to “live in their cars.” Why not? If something goes wrong with their health, they know the Gov will bail them out. Some are actually threatening to sue us if we require they take medical insurance that costs them nothing out of pocket as a condition of employment.

    A lot of rambling from someone who believes in personal responsibility, not a Gov safety net to protect everyone in every situation. If the Gov wants to step in to make a real difference, do something that will actually address the cost inreases of medical care, without this microscope that looks only at medical insurance. If that goes well, I might be willing to put some support into slightly more government control.

  • Double D

    The whole Health Reform Act was simply another big step towards Socialism/Communism. As Ronald Reagan warned us oh so many years ago. America will never accept Socialism, but they will accept Socialism disguised as something else…Liberalism. The insurance companies are simply doing what Obama wants…they are spreading the wealth. They are taking more from the people who have the ability to pay, so that they can pay for the people who don’t.