The health insurance industry has been at the center of the firestorm over raising rates. Practices such as rescission (canceling a policy) in the absence of fraud have been heavily criticized.
The Obama administration's healthcare reform law gives the federal government a greater oversight role than it had in the past. Previously, most regulations were left up to state insurance departments. These departments are often underfunded and understaffed, allowing what many consider consumer abuses to take place.
Secretary of Health and Human Services Kathleen Sebelius has vowed to change that. During a recent meeting with the CEOs of several major health insurers, she warned them that they would be under a closer watch than they were before.
According to Sebelius, the increased scrutiny is necessary to protect consumers, who have often suffered from health insurance plan premiums that continue to rise far beyond the rate of inflation. Included in the law are provisions that give HHS the authority to regulate medical loss ratios (the percentage of premiums spent on medical care), as well as review and possibly reject proposed rate increases. Most states already have the latter power, but it is rarely exercised.
Opponents of the strategy believe that the federal government is overreaching. They feel that it is yet another example of encroachment on private business. Moreover, the industry defends some of their most egregious rate hikes by saying that the actual cost of providing care has risen sharply over the past decade, and it is only inevitable that they must increase the cost of their health insurance plans to cover them.
Both sides agree that their talks were relatively productive. Cigna, HCS, Blue Cross Blue Shield, and the controversial WellPoint were the health insurance companies included in the meeting.
