Obama Administration Asks Health Insurers to Embrace Reforms Now

By | July 9, 2010

U.S. Health Secretary Kathleen Sebelius, who has bashed insurers over rate increases, is seeking their help in making medical coverage accessible for more patients in the years before major reforms take effect.

Sebelius, in an interview with Reuters, said she is pushing companies to help people gain insurance in the gap between now and 2014. That is when the healthcare law President Barack Obama signed in March mandates extensive changes.

Sebelius struck a cooperative tone after publicly chastising insurers for high rate hikes and after repeatedly calling them to the White House for highly publicized talks.

A more congenial relationship with insurers could help keep the major overhaul of the healthcare system on track and loosen strained relations between Democrats and big business ahead of the November midterm elections.

The goal in the next few years is to “stabilize the private sector to not only encourage those who have insurance today to keep it, but to hopefully bring additional folks back into the market,” Sebelius said earlier this week. She talked with Reuters after speaking at a discussion on drug development.

Health insurers, which include WellPoint Inc., UnitedHealth Group Inc., Cigna Corp. and Aetna Inc., fought the healthcare law, which hits the industry with tighter regulation, higher taxes and caps on profits.

Now, the Obama administration is promising to keep a close eye on rates but also seeking to work with insurers to make the law successful.

Sebelius, a former insurance commissioner and governor of Kansas, said her approach is gaining traction.

She said one insurer recently reached out to small businesses and signed up 500 new customers from companies that had not been aware they were eligible for tax credits.

“That’s exactly the kind of strategy I’m hoping will take hold,” she said.

Sebelius said she has argued to insurers in recent weeks that practices that shut out patients or businesses with high rates are harmful to consumers as well as the companies.

“Some of those strategies I think are not particularly good business models. If they lose more and more market share as we move toward 2014, it’s not really good for them,” she said.

Roughly 46 million people in the United States lacked health insurance in 2008, according to the U.S. Census Bureau. Experts say many have lost coverage since then in the economic recession.

The new healthcare law includes measures aimed at “stopping the erosion of the private market” before 2014, Sebelius said.

Employers can get financial help to keep early retirees covered, and small businesses can receive tax credits to defray insurance costs, she said. People denied coverage for serious medical problems can enroll in high-risk insurance pools set up as a temporary option.

Broader changes in 2014 are expected to extend coverage to more than 30 million Americans.

In past months Sebelius attacked big premium increases, and Obama warned companies not to impose unjustifiable rate hikes, adding to friction between the administration and industry.

Sebelius said she now hopes insurers will work with the administration. “I’m optimistic there is a real potential to do some important work over the next couple years in a collaborative fashion,” she said.

Insurers said despite past opposition they are now committed to making the healthcare law successful.

“We are totally focused on implementation and making the legislation work,” Karen Ignagni, head of the industry group America’s Health Insurance Plans, told reporters.

Companies are aiming to boost coverage during the transition period but are pressing for more efforts to control rising medical costs that push premiums higher, said Robert Zirkelbach, a spokesman for the industry group.

State insurance commissioners also are advocating a gradual shift to a requirement that companies spend more of each dollar in premiums for the benefit of patients, he said. Otherwise, they worry insurers will leave the individual market.

“It’s important that new requirements be structured in a way that doesn’t cause significant disruption for people purchasing coverage on their own, particularly in the years leading up to 2014,” Zirkelbach said.

(Additional reporting by Jon Lentz, editing by Gerald E. McCormick)

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