Sebelius Knocks Insurers for Big Profits and Big Rate Hikes

ABC News' Bret Hovell reports:

Health and Human Services Secretary Kathleen Sebelius Thursday unveiled a government report which she said “shines a light on the urgency for health reform,” and pins the rise of premiums in the individual healthcare market squarely on the profit margins of large insurance companies.

“I think this kind of rate increase gives a highlight to why the president said a year ago we need to address health reform, comprehensive health reform as part of addressing the economy,” Sebelius said.

News that Anthem Blue Cross in California would be raising premiums on some customers up to 39 percent has drawn criticism from the Obama administration.

The report , which is titled “Insurance Companies Prosper, Families Suffer: Our Broken Health Insurance System,” says that increases of that magnitude are not unique. It cites Anthem of Connecticut for requesting a 24 percent rate hike in 2009; Blue Cross/Blue Shield of Michigan for a requested 56 percent rate increase last year; and Regency Blue Cross Blue Shield of Oregon for a 20 percent premium increase.

“The five largest insurers in America have declared more than $12 billion worth of profits in 2009,” Sebelius said. “[Anthem Blue Cross of California] alone posted a $2.7 billion profit in the fourth quarter of 2009, just a week before they filed for a 39 percent rate increase.”

The report, and effort to refocus the healthcare debate at least in part on the large profits of insurers, comes one week before a scheduled healthcare summit at the White House, at which the Obama administration plans to sit down with a bipartisan group of leaders from the House and the Senate to restart the stalled negotiations.

Anthem Blue Cross says that their profits were not a factor in the planned rate hike. It says the hike is a matter of economics as health care costs continue to rise.

“Rate increases reflect the increasing underlying medical costs in the delivery system which are unsustainable,” said Brian Sassi, an Anthem Blue Cross executive, in a letter to Sebelius last week.

At her press conference, Sebelius contended that the profits were out of line with the increase in health care costs.

“To suggest that this is entirely in line with even health care costs, which clearly are still exceeding typical inflation costs, these profits are wildly excessive, are way over anybody's estimate,” Sebelius said.

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