November 4, 2009 / 12:11 AM / 10 years ago

US sen. asks health insurers about small businesses

* Harkin sends letters to four top companies

* Seeks details on premiums, compensation

* Industry group says prices mirror costs

By Susan Heavey

WASHINGTON, Nov 3 (Reuters) - Health insurance companies were asked on Tuesday for information on pricing for small businesses, the latest example of U.S. lawmakers putting pressure on the industry as Congress considers how to expand coverage to more Americans.

The chairman of the Senate health committee sent letters to Aetna Inc AET.N, Humana Inc (HUM.N), UnitedHealth Group Inc (UNH.N) and WellPoint WLP.N following reports that small companies could expect a 15 percent rate hike next year.

“Health insurance companies should open their books and explain to the American people why they support a health insurance market for small businesses that is so dysfunctional, and so lacking in transparency,” Senator Tom Harkin, an Iowa Democrat, said in a statement.

Harkin also asked for information from the insurers on officials making more than $5 million a year.

The move follows a number of other probes in the Senate and the U.S. House of Representative. Both chambers are pushing to finish legislation overhauling the nation’s $2.5 trillion health care system by the end of the year, seeking to make good on one of President Barack Obama’s top campaign promises.

In August, senior Democrats on the House Energy and Commerce Committee asked dozens of U.S. health insurers for specific information about executive compensation and other practices.

Senator John Rockefeller has asked the top 15 insurers to explain what portion of the premiums they charge go to profits versus patient care, including Aetna, Humana, UnitedHealth and WellPoint.

On Monday, Rockefeller said an analysis shows for-profit health insurers are using less of collected premium dollars to pay for actual health care services than had previously been made public.

The industry has said 87 cents of every premium dollar goes toward care, while an analysis released by Rockefeller said the amount was between 74 cents and 84 cents.

“They’re just lying,” the West Virginia Democrat told reporters on Tuesday.

America’s Health Insurance Plans (AHIP), the industry’s lobbying group, said other factors are driving up costs — including people using more health services.

“Simply by looking at the percentage of administrative costs doesn’t tell you how efficient a healthcare plan really is,” AHIP spokesman Robert Zirkelbach said, declining to comment on compensation.

As for rates and premiums, they “are increasing because we’re using more healthcare services, and we’re spending more for those services,” he said.

Obama and many Democrats have pushed for a government-run health insurance plan, or so-called “public option,” to force private insurers to be more competitive.

Some more moderate lawmakers say such an alternative should only be “triggered” if other reforms in the pending legislation fail to deliver necessary changes in the insurance market.

But Rockefeller said he was concerned it could take years before a public plan could be enacted.

“In that time, I’m just terrified by what insurance companies could do to premiums,” he said. (Reporting by Susan Heavey; Editing by Tim Dobbyn)

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