Insurers Tussle with Government, Stark over Rising Premiums


The landmark health care reform bill passed by Congress this year is Rep. Pete Stark’s baby. Beware insurance companies, don’t mess with Pete’s baby!

Stark, who is one of the authors of the House’s version of the historic legislation, has stern words for insurance companies, who critics say are raising premiums and high-tailing out of certain markets in advance of forthcoming regulations within the new law.

“Insurers are using the consumer protections in health reform as a cover for their own greed,” Stark said last week in support of a letter from Health and Human Services Secretary Kathleen Sebulius to heads of health insurance providers. “They’re making billions more in profits over last year. Now they want us to believe that they’re hurting so badly they need to keep gouging consumers.”

Sebelius’s equally terse letter to insurance executives, threatened to leave certain companies out of the important health care exchanges due to begin in 2014 if they did not cease dispensing what she called, “misinformation.” “Simply stated, we will not stand idly by as insurers blame their premium hikes and increased profits on the requirement that they provide consumers with basic protections,” said Sebelius

In the months after health care reform was passed by Congress, Stark has feuded on numerous occasions with insurers who he says have steeply raised premiums for its customers while reeling in record profits.

Karen Ignagni, the president and CEO of America’s Health Insurance Plans, wrote Sebelius arguing there was nothing nefarious about the increases. “It’s a basic law of economics that additional benefits incur additional costs, and the impact on premiums depends on the type and amount of coverage policyholders had before,” said Ignagni. The passage apparently raised the ire of Stark who countered with his own view of Econ 101.

“As long as we are abiding by the basic laws of economics, we can all agree that with bigger profits should come lower premiums,” said Stark. “Given that the second quarter earnings reports of your member organizations show billions more in profits over last year, I am eager to hear how you intend to share these profits with policyholders.”