HHS to insurers: Don't blame us for your rates

WASHINGTON — President Barack Obama's top health official on Thursday put the insurance industry on notice that the administration will not tolerate blaming premium hikes on the new health overhaul law.

"There will be zero tolerance for this type of misinformation and unjustified rate increases," Health and Human Services Secretary Kathleen Sebelius said in a letter to the insurance lobby.

"Simply stated, we will not stand idly by as insurers blame their premium hikes and increased profits on the requirement that they provide consumers with basic protections," Sebelius said. She warned that bad actors may be excluded from new health insurance markets that will open for business in 2014 under the law. They'd lose on a big pool of customers, as many as 30 million people nationwide.

The letter to America's Health Insurance Plans was the latest volley in a war of words that has generally played in favor of the administration. An HHS official said the letter is a pre-emptive move, after the department got word that several smaller carriers around the country are blaming the new law for rate increases this year.

Although the big expansion of coverage under the law won't take place for another three years, several new benefits go into effect starting Sept. 23. Lifetime dollar caps on coverage are abolished, and plans must allow parents to keep their children on the policy up to age 26. Many plans will also have to guarantee coverage for children regardless of a medical condition, and provide preventive care with no cost-sharing for the patient.

The administration estimates that those new benefits will raise premiums by no more than 1 to 2 percent. Major benefit consulting companies say the impact will be in the single digits, although it may vary considerably from plan to plan.

Unpredictable premium hikes are a constant worry for small businesses and people who buy coverage directly. Employees of large companies are generally shielded from big rate swings from year to year, although their costs also creep up.

Obama used premium hikes to his advantage earlier this year in the final push to get health care overhaul legislation through Congress.

After Anthem Blue Cross sought an increase of as much as 39 percent for some of its California customers who purchase coverage directly, the president made the company into a poster child for insurance problems. California regulators recently approved an increase averaging 14 percent for Anthem customers.

Analysts say the industry is generally in good financial condition this year, and that may help to keep premiums in check.