Monday, September 20, 2010

Regulations, Premiums, and the First Amendment

Perhaps unsurprisingly, most of this morning’s headlines center around the September 23 six-month benchmark of the health law’s enactment, and the many new health care regulations taking effect on Thursday.  The Wall Street Journal reports on the President’s anticipated involvement Wednesday, with both a speech and a meeting with insurance commissioners, followed by a series of rallies by health care supporters on Thursday.  However, the Journal also notes that health insurance carriers’ need to raise premiums to pay for the new mandates included in the law have been “muddying the Democrats’ contention that the law will rein in sharply rising premiums.”

As previously noted here, HHS Secretary Sebelius earlier this month wrote an ominously worded letter to AHIP attacking “misinformation and unjustified rate increases.”   But as a very good column in yesterday’s Kansas City Star points out, the Sebelius letter “defies economic reality:” “It’s absurd for the Administration to pretend [insurance] changes won’t result in increased risk for insurers, which has to be covered by premiums….What may (or may not) work out for an industry average won’t necessarily apply to particular plans.”

A CBS News piece asked a related question about Secretary Sebelius’ letter: “Don’t the insurance companies have a right to make their own analyses and claims to their customers?”  Sebelius’ quoted response: “We just want to make sure that communication is as accurate as possible.”

Insurance companies are being asked to provide more benefits to consumers beginning this week, and those benefits come with costs attached.  In some cases, plans in the individual and small group markets could require significantly higher premiums, if they did not previously include many of the new required benefits.  Yet the Administration’s talk of enforcing the “accuracy” of communications between businesses (i.e., insurance carriers) and their clients could strike some as an attempt to infringe upon companies’ First Amendment rights.

Moreover, the Administration has yet to release the methodology behind its claim that the health care law will raise premiums by only 1-2 percent, despite a Congressional request made nearly two months ago.  Finance Committee Republicans also wrote to Chairman Baucus on Friday requesting a hearing on premium increases, specifically asking for testimony from Medicare actuary Rick Foster and HHS’ Jay Angoff.  It will be worth watching to see whether the Administration and Democrats in Congress, having pushed for transparency with respect to insurers’ premium increases, will be similarly transparent with regards to their own estimates of the impact of the law on premiums.