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Insurers offer to end higher premiums for the sick

WASHINGTON — The health insurance industry said Tuesday that it was willing to end the practice of charging higher premiums to sick people if Congress adopted a comprehensive plan requiring all Americans to carry insurance.

Insurers remain opposed to the creation of a government-run health insurance plan. But the industry's willingness to change its rate-setting practices could make it easier for Congress to reach a consensus on legislation to overhaul health care.

The industry's new position, which came as a surprise to lawmakers, could narrow the issues on which insurers are ready to fight the Democrats who now control Congress and the White House.

In effect, insurers said they were willing to discard an element of their business model — pricing insurance policies, in part, on the basis of a person's medical condition or history.

In the past, insurers have warned that if they could not consider a person's health status in setting premiums, the rates charged to young, healthy people would need to soar. But they said Tuesday that they were exploring ideas to prevent such sharp increases by spreading the risks and costs broadly across a larger population, including the healthy and the unhealthy.

Insurers said they could accept more aggressive regulation not just of their premiums, but also of their benefits, underwriting practices and other activities. Such strict regulation, they said, would make it unnecessary to create a new public insurance program offered through the federal government.

President Barack Obama and many Democrats in Congress want to establish health insurance exchanges where people could buy coverage offering at least a standard set of benefits. The goal is to rein in costs and cover more than 45 million uninsured people.

The insurers set forth their new position at a Senate hearing on Tuesday and in letters to the chairmen and senior Republican members of the two Senate committees primarily responsible for health care legislation.

The letters were signed by the presidents of the major trade groups that represent most of the industry: Karen Ignagni of America's Health Insurance Plans and Scott Serota of the Blue Cross and Blue Shield Association.

Ignagni and Serota said insurers still wanted to retain the right to charge different premiums based on the age, place of residence and family size of subscribers.

Sen. Jeff Bingaman, D-N.M., who presided over the hearing of the Committee on Health, Education, Labor and Pensions, welcomed the insurers' position on premiums.

"It was a significant step for them to take," Bingaman said in an interview. "That's certainly not been their position in previous years. I hope it moves us closer to something that we could label a consensus."

Sen. Max Baucus, D-Mont., who is chairman of the Finance Committee, also welcomed the insurers' stance. "It indicates that we may be able to have health care reform this year," Baucus said, "because the major players are stepping up and saying they are willing to play."

Insurance companies now charge very high premiums to people who are trying to purchase coverage as individuals and have a history of medical problems, such as diabetes or skin cancer. Even if such a person is offered coverage, that individual is often unable to afford the high premiums. About 7 percent of Americans buy their coverage as individuals, while more than 60 percent have job-based insurance.

Sandy Praeger, the Kansas insurance commissioner, who testified on behalf the National Association of Insurance Commissioners, said the companies were taking "a very good step."

"As we move toward getting everybody covered, we have to get rid of health status as a rating factor," Praeger said.

Regulation of premiums varies from state to state. Praeger said premiums for a person with a history of serious illness are often much higher than premiums for younger, healthier people — if the sick people can get coverage at all.

Information from the Associated Press was used in this report.

Insurers offer to end higher premiums for the sick 03/24/09 [Last modified: Tuesday, March 24, 2009 10:32pm]

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