 Insurance industry responds to Obama's reform proposal

Medical Insurers Slam Proposed Supervision

Obama Administration's Plan for a Federal Overseer on Premiums Doesn't Address Rising Medical Costs, They Charge.

By AVERY JOHNSON

The Obama administration's proposal to create a federal body to oversee insurance premiums drew fire Monday from insurers, which contended it would do little to contain spending and could ruin some companies.

The plan, which Mr. Obama hopes to include as part of his health-care overhaul, would create a new agency to be called the Health Insurance Rate Authority to review premium increases and block those it deemed unreasonable. That would add federal supervision to a patchwork of state insurance regulators that examine premium increases.

The issue has gained steam in recent weeks after some insurers raised rates substantially, starting with an up to 39% increase by Anthem Blue Cross, a unit of WellPoint Inc., on individual plans in California. That provoked sharp words from the administration and triggered hearings in Congress and California.

America's Health Insurance Plans, the industry's trade group, said that double-digit premium increases are a sign of higher medical costs, which it said insurers often merely pass on. Karen Ignagni, AHIP's president, said hospital and doctor bills are 40% to 50% higher than last year, owing in part to biotechnology drugs.

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