Health Insurers Challenged for Blaming U.S. Premium Rise on Obama

Health insurers were criticized by U.S. Health and Human Services Secretary Kathleen Sebelius for “falsely blaming” premium increases on the health law signed in March by President Barack Obama.

Sebelius said in a letter today that insurers should immediately stop spreading “misinformation” about the health law. The letter did not name any insurers and was sent to Karen Ignagni, chief executive officer of America’s Health Insurance Plans, the Washington trade group representing the industry.

Insurers and the Obama administration disagreed repeatedly earlier this year during debate on the health-care overhaul proposal that became law on March 23. Insurer shares have dropped 6 percent since the law was enacted, as measured by the Standard & Poor’s Managed Health Care Index.

“It has come to my attention that several health insurer carriers are sending letters to their enrollees falsely blaming premium increases for 2011 on the patient protections in the Affordable Care Act,” Sebelius wrote, referring to the health overhaul.

“I urge you to inform your members that there will be zero tolerance for this type of misinformation and unjustified rate increase,” she said in the letter.

Ignani, the insurance group CEO, responded to the criticism by saying premium increases reflected “a basic law of economics.”

‘Soaring Prices’

“Health insurance premiums are increasing because of soaring prices for medical services, the impact of younger and healthier people dropping their insurance during the weak economy, and additional benefits required under the new law” Ignani said in an e-mail.

The insurers that sent the letters to enrollees include Portland, Oregon-based Regence Group, Obama administration spokesman Nick Papas said in a telephone interview. Regence is a not-for-profit Blue Shield health plan that offers insurance in several states in the northwestern U.S. Samantha Reese, spokeswoman for Regence, confirmed that the insurer had sent letters about premium increases to beneficiaries.

Blue Cross Blue Shield of Illinois sent similar correspondence, Papas said in an e-mail. Mary Ann Schultz, listed by the Illinois company on its website as a spokeswoman, did not immediately return a call and e-mail requesting comment.

The Illinois plan is a unit of Health Care Services Corp., a Chicago-based customer-owned mutual company that operates plans in several states.

To contact the reporter on this story: Drew Armstrong in Washington at darmstrong17@bloomberg.net;

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.