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Sebelius Calls on Health Insurers to Halt 'Scare Tactics' on Premium Hikes

By Jane Norman, CQ HealthBeat Associate Editor

Health and Human Services Secretary Kathleen Sebelius fired off a letter to the nation's health insurance trade association Thursday warning that there will be "zero tolerance" for "unjustified rate increases" and "misinformation" about the health care law.

In her letter to America's Health Insurance Plans, Sebelius cited reports that some carriers are sending letters to enrollees "falsely blaming" proposed premium hikes on the new laws (PL 111-148, PL 111-152). While the most sweeping provisions of the law don't kick in until 2014, some key insurance changes will go into effect on Sept. 23, including a ban on canceling coverage for sick people unless fraud is involved, and coverage of most adult children up to age 26 under their parents' policies.

The Sebelius and the industry have been at sharp odds off and on during the health care battle of the past year and a half, though tensions seemed to have eased in the past couple of months. That may be changing as some of the law restrictions on health insurers approach reality.

Some top HHS officials, including Donald M. Berwick, the administrator of the Centers for Medicare and Medicaid Services, are scheduled to appear before health insurers next week at a major meeting on Medicare and Medicaid sponsored by AHIP.

"I ask for your help in stopping misinformation and scare tactics about the Affordable Care Act," said Sebelius. The Obama administration and states "will not tolerate unjustified rate hikes in the name of consumer protections," she said.

Sebelius said that according to government and some private analysts alike, "any potential premium impact from the new consumer protections and increased quality provisions under the Affordable Care Act will be minimal."

HHS estimates that the effect will be no more than a 1 or 2 percent increase, Sebelius said. She said that's consistent with estimates from the Urban Institute and Mercer consultants as well as some insurers' estimates. And any premium increases will be offset by out-of-pocket savings resulting from the law, she said.

Earlier Thursday, AHIP spokesman Robert Zirkelbach circulated a defense of premium hikes, saying that "health insurance premiums are not arbitrary decisions" and are "based on actuarial calculations that take into account a variety of factors, including the type and amount of coverage purchased, the cost of providing medical care, and changes in the risk pool."

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