Updated at 10:17 a.m. on Feb. 22.
President Obama this morning released a health care proposal that he will bring as a starting point for the bipartisan health care summit he is hosting Thursday. The plan closely follows the health care reform legislation that the Senate passed in December, but adds a new provision that would give the HHS secretary authority to block insurance company premium increases if the secretary deems them unjustified. Currently, that power rests with states, though states don't often take action.
Are large insurance premium hikes justified from profitable carriers? What veto or moderating authority should the federal government or states have over insurance rates? Are states asleep at the switch? What strikes you as positive or negative about Obama's new plan, and will it provide a basis for compromise legislation?
A White House spokesman said that the president does not want to "start from scratch" at the summit Thursday, but that he is still open to incorporating ideas from Republicans.
Obama's proposal makes a number of changes to the Senate-passed bill, including eliminating Nebraska's extra Medicaid funding and providing extra federal Medicaid help to all states. He also would come down harder on employers that fail to offer insurance to employees by requiring a $2,000 per employee penalty, as opposed to $750. He also would increase the threshold for the excise tax on the most expensive health plans from $23,000 for a family to $27,500.
The president's proposal would add about $75 billion to the cost of the Senate-passed bill, say White House officials, who added that the extra cost would be fully offset. That would bring the full cost of the Senate-passed bill to about $900 billion over 10 years.
Recent reports that Anthem Blue Cross of California would increase health insurance premiums by 39 percent are only the latest evidence that insurers are raising prices while reaping huge profits, HHS Secretary Kathleen Sebelius said last week as she released a report on premium hikes. The House Energy and Commerce Oversight and Investigations Subcommittee has scheduled a hearing for Wednesday.
Sebelius pointed to provisions in the House- and Senate-passed health reform bills that would require insurers to spend 80-85 percent of premiums on medical claims.
The five largest health insurance companies "took in combined profits of $12.2 billion, up 56 percent over 2008," the report says. But according to Karen Ignagni, president of America's Health Insurance Plans, "Fortune 500 puts the health plan industry profits at 2.2 percent, 35th on its list of profits by industry sector."
In a statement, Ignagni blamed multiple factors for premium hikes:
• sharp increases in provider rates;
• increased cost-shifting as providers seek to offset the costs of treating more Medicaid patients;
• an increase in uncompensated care costs;
• consolidation among hospitals and other health care providers;
• a wide range of new state laws, including benefit mandates, regulations, and premium taxes; and
• economic factors that have caused some people to drop coverage, resulting in a risk pool that is more heavily weighted with older, less healthy persons.