Sebelius criticizes health plans for 'unjustified rate increases'

Health and Human Services Secretary Kathleen Sebelius has once again come down on health insurers, saying she has "zero tolerance" for plans that spread misinformation and unjustifiably hike premiums.

According to the HHS, Sebelius issued a letter Friday to America's Health Insurance Plans, calling on the national health insurers association's members to stop using scare tactics and falsely blaming premium increases for 2011 on patient protections in the Affordable Care Act. 

Sebelius said the consumer protections and out-of-pocket savings provided for in the Affordable Care Act should result in a minimal impact on premiums for most Americans. The HHS estimates the effect of healthcare reform will be a potential premium increase of 1 percent to 2 percent. Under the Affordable Care Act, she said, states have new resources to crack down on unjustified premium increases.

In the letter, Sebelius reminded Karen Ignagni, AHIP's president and CEO, that the provisions to provide access to healthcare coverage under the Affordable Care Act "were fully supported by AHIP and its member companies."

According to the HHS, many of the legislation's key protections take effect for plan or policy years beginning on or after Sept. 23. All plans must comply by then with such provisions as no lifetime limits or rescissions except in cases of fraud or intentional misrepresentation of material fact and coverage of most adult children up to age 26. 

Any premium increases will be moderated by out-of-pocket savings resulting from the law, Sebelius said.

"These savings include a reduction in the 'hidden tax' on insured Americans that subsidizes care for the uninsured," she said. "By making sure insurance covers people who are most at risk, there will be less uncompensated care and, as a result, the amount of cost shifting to those who have coverage today will be reduced by up to $1 billion in 2013."

According to Sebelius, the HHS has provided 46 states with resources to strengthen the review and transparency of proposed premiums. Later this fall, the HHS expects to issue a regulation that will require state or federal review of all potentially unreasonable rate increases filed by health insurers, with the justification for increases posted publicly for consumers and employers. 

"We will also keep track of insurers with a record of unjustified rate increases," she said. "Those plans may be excluded from health insurance exchanges in 2014."