February 18th, 2010
02:45 PM ET
4 years ago

Health insurance system broken, new administration report says

'Premium increases have left thousands of families that are already struggling during the economic downturn with an unpleasant choice between fewer benefits, higher premiums, or having no insurance at all,' HHS Secretary Kathleen Sebelius said Thursday.
'Premium increases have left thousands of families that are already struggling during the economic downturn with an unpleasant choice between fewer benefits, higher premiums, or having no insurance at all,' HHS Secretary Kathleen Sebelius said Thursday.

Washington (CNN) - Health insurance premiums have skyrocketed in recent years and a new government report says the increases are likely to continue, underscoring the need for reform.

In releasing the report Thursday, Health and Human Services Secretary Kathleen Sebelius pointed to the recent announcement by Anthem Blue Cross of California that it plans to raise individual insurance premiums up to 39 percent - a move that could affect nearly 800,000 customers - as an example of excess.

According to the report, titled "Insurance Companies Prosper, Families Suffer: Our Broken Health Insurance System," Anthem is not the only company raising rates.

"Over the last year," Sebelius said, "America's largest insurance companies have requested premium increases of 56 percent in Michigan, 24 percent in Connecticut, 23 percent in Maine, 20 percent in Oregon, and 16
percent in Rhode Island, to name just a few states.

"Premium increases have left thousands of families that are already struggling during the economic downturn with an unpleasant choice between fewer benefits, higher premiums, or having no insurance at all. Hard-working families deserve better."

Both Maine and Connecticut rejected the premium increases requested in those states. Sebelius said some states have the authority to take a hard line against rate increases and some do not. In California, insurance companies do not need prior approval. They can put a rate increase in place and then file it with the state insurance commissioner.

Sebelius contacted Anthem Blue Cross of California, asking them to publicly justify raising rates. As a result, Anthem is delaying the rate hike for two months so that the Department of Insurance can review the request, but the company says it is in "full compliance with all requirements in the law."

"Our decision to agree to postpone the rate adjustment does not change the underlying issue. All health plans are in the same situation in trying to deal with the steadily increasing medical costs in the delivery system, which are not sustainable," said Brian A. Sassi, president and chief executive officer of the Consumer Business Unit of WellPoint, Anthem's parent company. "We need to refocus the health care reform debate toward steps that will improve quality and control the underlying medical costs, which is driving the high cost of coverage."

But Sebelius said WellPoint recorded more than $2.7 billion in profits last quarter - one week before the announced rate increase.

In fact, she said, the five largest health insurance companies - WellPoint, Cigna, Aetna, UnitedHealth group and Humana - took in combined profits of more than $12 billion in 2009, up 56 percent from 2008. She called those profits "widely excessive."

American's Health Insurance Plans, a national association of insurance providers, says premiums are rising because of soaring medical costs and because young, healthy Americans are dropping coverage.

"Increases in the cost of coverage in the individual market shine a spotlight on the urgent need to reduce the growth of underlying medical costs and bring everyone into the system," said Karen Ignagni, the association's
president and CEO. "If reform doesn't address these pieces, it will not solve the serious problems that individuals, families and employers face."

Next week, President Barack Obama will sit down with congressional leaders from both parties in an effort to hammer out differences and move health care reform forward. Sebelius said the president intends to combine the best ideas of both the House and Senate bills into one proposal that will posted on the Web prior to the February 25 meeting.

soundoff (30 Responses)
  1. ThinkAgain

    Hey, but according to the Republicans, all we have to do is let the marketplace correct itself.

    You know, when enough people die from lack of health care, the insurance companies will lower their rates, as they compete for fewer and fewer customers.

    February 18, 2010 03:59 pm at 3:59 pm |
  2. Russell

    And you idiots still think we don't need reform , just ask your republicans friend when your mother or grandfather develops cancer .....I'll bet you won't get any help , so go ahead and vote them in and watch the destruction from within of this nation....

    February 18, 2010 04:00 pm at 4:00 pm |
  3. ThinkAgain

    Health insurance companies are like the Wall Street CEOs: Make as much money as you can, regardless of the consequences to your customers or to your country.

    Because, after all, money is everything. Just ask all the Republicans who've blocked meaningful health care at every turn.

    Time to dust off the old reconciliation process and get health care reform DONE!

    February 18, 2010 04:00 pm at 4:00 pm |
  4. Marc

    But please remember, Health Care Reform = Socialized Medicine = Bad for the US. And that those who say that had yet to show an alternative.
    One with numbers to back it up that is.

    February 18, 2010 04:00 pm at 4:00 pm |
  5. Sniffit

    "America's largest insurance companies have requested premium increases of 56 percent in Michigan, 24 percent in Connecticut, 23 percent in Maine, 20 percent in Oregon, and 16 percent in Rhode Island, to name just a few states."

    Gotta pay for all those anti-health-care-reform-bill commercials, misinformation campaigning and PAC and campaign donations somehow, don't they?

    February 18, 2010 04:03 pm at 4:03 pm |
  6. FL Voter

    More reasons to pass health-care reform for the American people through reconciliation if necessary and with a public option to increase market competition.

    February 18, 2010 04:03 pm at 4:03 pm |
  7. Steve (the real one)

    Not exactly breaking news, is it?? The problem is the current HC bill with the threats of prison and fines is NOT the answer either!

    February 18, 2010 04:04 pm at 4:04 pm |
  8. Dutch/Bad Newz, VA

    Well point and the rest of the insurance companies are crooks. They are the Death Panels.

    February 18, 2010 04:08 pm at 4:08 pm |
  9. mike

    Yawn ...

    Now you foolish GoP / right-wing / tea bags-in-your-mouth morons know EXACTLY why the Ins. Industry bought airtime & got to you believe A BILL OF FALSE GOODS ...

    Looks like the Ins. Industry may just p/o enought people to convince Reid to just do what he should of in the first place & reconciled Health Care Reform with all the provisions in tact ...

    Time to stop this nonsense and strip the Ins Industry of their quasi anti-trust protections ... I love how they all talk about 'the Free Market' yet the Ins industry is the furthest thing from it ...

    keep drinking the kool-aid you right-wing tools ...

    February 18, 2010 04:11 pm at 4:11 pm |
  10. Ethan

    Republican Teabaggers WANT to pay exorbitant health insurance premiums.

    They also want the REST OF US to pay 30% or more increased rates every year.

    THEY want to pay more and want the US to pay more too.

    That's the only rational reason for the way they act.

    If they wanted to pay less, they would have supported health care reform with the rest of America. Simple as that.

    February 18, 2010 04:12 pm at 4:12 pm |
  11. richp the poconos

    So has the health companies stock prices, come on DC mess with it again, lets see if you can get another 50% on my investments before I bail out.

    February 18, 2010 04:13 pm at 4:13 pm |
  12. Four and The Door

    If Democrats were even half serious about health care reform, they would work with the Republicans to come up with a program that reduces costs and makes health care more efficient. Nobody can look at their efforts so far...using health care to grow government another 15%...using health care as a way to reward their most faithful unions with tens of billions of dollars in favors...nobody can look at what they have spent their efforts to get done so far and say they are really serious about the kind of health care reform America needs in 2010! From the hole they have dug themselves by now, it is very unlikely the Democrats will get anything done about health care any time soon.

    February 18, 2010 04:16 pm at 4:16 pm |
  13. Chipster

    My organization's insurance premium was increased by 84% last year. I don't know what it will be this year but, if it goes up like that again, we'll be unlikely to afford to continue coverage. We're a small business and cannot afford these premiums anymore.

    More and more Americans are losing their health coverage and many aren't even award of how close they are to losing that and their homes. One serious illness is all it takes.

    February 18, 2010 04:19 pm at 4:19 pm |
  14. John

    Most Americans are opposed to the stimulus bill, yet they favor the individual pieces of the bill.

    Most Americans are opposed to health care reform, but they don't even know what is in the bill. Most people think that it will be too costly even though the non-partisan budget office says it will save $1trillion over the next 2 decades.

    What is wrong with this country?

    February 18, 2010 04:21 pm at 4:21 pm |
  15. John

    Family A can afford adequate health insurance.

    Families B and C can afford little or none.

    Conservative response: Soooooo?

    February 18, 2010 04:23 pm at 4:23 pm |
  16. PREDICTA

    So lets tax my Cadillac plan 40 percent so I'm now paying thousands more for insurance so someone without it can get crappy coverage. Brilliant!

    February 18, 2010 04:23 pm at 4:23 pm |
  17. sandy

    No kidding. I worked in a hospital business office for over 30 years and I saw costs just keep going up and up over the years. I cannot believe these Democrats do not just go it alone and pass the health care bill. Look around, people are hurting and what do the insurance companies do, why they raise the premiums. This is outrageous and I think the American people should march on Washington. I also bellieve it is not the Presidents fault, it's the Senates and the ever popular congresss. That was a joke.,

    February 18, 2010 04:23 pm at 4:23 pm |
  18. Pat F

    What a bunch of grandstanding crapola. You know why rates are going up? Ok, first, let's do an MRI and a CT scan on your sprained toe. Then, let's prescribe a Nexium for your "gastric reflux" because you're so fat you can't get off the couch. Then, we'll give you unlimited chiropractic coverage so you can get a free massage once a week. Then, we'll provide mandated full coverage for all former employees and ex-spouses for three years, and send out require endless notices about your "privacy rights" which require legions of lawyers to draft.

    Are you STILL wondering why your rates are going up?

    February 18, 2010 04:26 pm at 4:26 pm |
  19. cmoore

    How is raising insurance premiums on current policy holders already paying to much going to help? The Obama administration is truly what's broken. They rob from Middle Class Peter to pay Lazy Paul's bills and call it Health Care Reform. Shame on you Obama Administration!

    February 18, 2010 06:29 pm at 6:29 pm |
  20. Vietnam Combat Vet, Ohio

    The weak people in this country get what they deserve!! They are the ones that don't vote out the ones that screw us. My Dad was right when he said, " the people in this country are nothing but a flock of sheep, following whoever to wherever and winding up nowhere". He was right. Look where we are. Want health care, then get out and fight for it. Sitting around crying to yourself will get you nothing. You let the crooks in Washington steal our social security money for years, then when these same crooks say SS will go bankrupt, you sit there. Make the gov pay back the trillions of $ they "borrowed". Then those on SS could get a decent raise and have enough coming in to live comfortably. Do you get my drift? Doubt it but it felt good to say the truth. I am not afraid to speak up, how about you? Fly your flag upside down, a sign of stress in USA>

    February 18, 2010 06:40 pm at 6:40 pm |
  21. Annie, Atlanta

    There are now 6 states that are facing an increase in premiums from 20 to 50%, and I'd bet more to come. And Republicans hope to win the mid-terms by standing in the way of reform? And there are people that agree with them? Have we lost our minds?

    Wait until those of you against reform who have employee sponsored health insurance have to pay for it yourselves because your employer can no longer afford the premiums. It's a shame it would take something like that for you to be able to relate. It's expensive; very.

    February 18, 2010 06:46 pm at 6:46 pm |
  22. Willy Brown

    The only thing broke is the high School administration level we have ruining America today.

    February 18, 2010 06:49 pm at 6:49 pm |
  23. proud mother and sister of a soldier

    When will this administration realize everyone wants reform....reforming the existing system not creating another government run system. There is so many things that need attention. Medicare and Medicaid have too many of their own [problems. Look to the failures of the canadian, german and french universal care. Do you really think if those countries can't financially support their health system with everyone regardless of income paying a minimum 37% tax that we could provide this system to 303mil citizens with a majority who do not pay taxes? Let's start with tort reform, let's make cross state line purchases, reign in pharmasceuticals but keep socialized medicine out of my life!

    February 18, 2010 06:59 pm at 6:59 pm |
  24. A keen observer

    The insurance companies and their Tea Party and Republican supporters want to maintain and support record profits and rising premiums for insurance companies. If they succeed nobody will be able to afford health insurance except Congress members who enjoy taxpayer financed health care. What a bunch of creeps!

    February 18, 2010 07:14 pm at 7:14 pm |
  25. phoenix86

    What a surprise statement coming from an administration who has spend the last 8 months demonizing the insurance industry.

    The Obama administration has zero credibility.

    February 18, 2010 07:16 pm at 7:16 pm |
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