Sebelius: HHS negotiating with insurers on premiums

By Sam Baker
06/24/13 02:44 PM ET - The Hill's Healthwatch

The federal government is taking a more active role than expected in selecting plans for ObamaCare’s new insurance exchanges, Health and Human Services Secretary Kathleen Sebelius said Monday.

Sebelius said the federal government is negotiating with insurance companies over the rates they want to charge in exchanges run by the federal government. She contrasted the negotiations with state laws that accept all policies at all prices.

“We intend to do rate negotiation and make sure that the plans are going to offer consumers the best possible choices, as opposed to the law in some states ... where a company comes in with the plan rates and you take what you get,” Sebelius said.

The healthcare law sets up an insurance exchange in each state. It allows each state to choose whether it will be an “active purchaser” ― negotiating with insurers and rejecting plans that don’t offer a good enough deal ― or simply accept all policies that meet federal standards.

HHS had said it would use the latter approach in the exchanges it operates. But officials said Monday that the department is still exerting some pressure on insurers that want to sell their policies through federally run exchanges.

The department is working with state regulators to approach insurers whose rates come in significantly higher or lower than average to make sure their filings are correct, a senior HHS official said.

The official said HHS is not telling insurance companies what their competitors plan to charge, but can still let a particular company know if its prices come in higher than average.

The federal government doesn’t have the authority to block premium increases or prevent companies from entering the federal exchange as long as they meet standards set out in the law.

Those limitations could hinder the department’s effort to negotiate with insurers.

Some states running their own exchanges have empowered the new entities to act as active purchasers.

California, for example, rejected several of the insurance companies that wanted to sell policies in the state’s exchange, and state officials credited that power with lower-than-expected premiums for policies sold through the exchanges.

HHS “isn’t an active purchaser in the way that some states would regard it,” Sebelius said Monday, but it is examining rates as well as benefits and provider networks as plans apply for the federally run exchanges.

HHS will run all or part of the exchanges in 34 states.