Health Insurance, Free Speech, Regulation of Advertising and HHS Secretary Sebelius' Threats: The Story Behind the Story

The Disease Management Care Blog isn't quite as vexed as the editors of The Wall Street Journal over HHS Secretary Sebelius' threats of "zero tolerance" for commercial insurers' exercising free speech informing their customers that the passage of health insurance reform can be tied to recent premium rate increases.  According to the text of the letter, HHS is annoyed because it has already predicted, thanks to numerous actuarial analyses, that any coming rate increases will be minimal. Accordingly, "misinformation and scare tactics about the Affordable Care Act" (ACA), thanks to HHS' willingness to exclude insurers from participating in health insurance exchanges, will be terminated with extreme prejudice.

The DMCB checked out page 21 of the ACA that grants the Secretary the authority for an annual "review" of "unreasonable" rate increases.  "Review" and "unreasonable" are undefined but here's the abundantly clear statutory basis for Ms. Sebelius' threat:

[The Secretary will] make recommendations, as appropriate, to the State Exchange[s] about whether particular health insurance issuers should be excluded from participation in the Exchange [s] based on a pattern or practice of excessive or unjustified premium increases.

The DMCB's read of the Act reveals that there is no language that grants the HHS Secretary the authority to bar insurer participation in an exchange on the basis communicating to customers in a manner that is contrary to the Department's expectations. 
 
Yet, the DMCB suspects smart commercial insurers won't be surprised by this apparent trampling of their organizations' free speech rights.  To find out why, check out Ms. Sebelius' old home State of Kansas Insurance Department web site and you'll see typical regulatory language that prohibits insurers from distributing any marketing or other materials that "misleads."  This reasonable prohibition is designed to protect consumers from false advertising. As a result, commercial insurers, knowing that their marketing is closely monitored, have been careful to not deviate from using the exact information contained in their highly regulated policies.  Ever wonder why your insurance correspondence is in 3 point font legalese?  Now you know.
 
Ms. Sebelius is a former state insurance commissioner who is undoubtedly bureaucratically conditioned to the need for close surveillance of all advertising, marketing, correspondence or communication.  Commercial insurance companies should be quite used to this, so the DMCB is surprised to read that some unnamed companies would even think about blaming the Feds.
 
Even more surprising was the response of the DC-based health insurer trade association.  AHIP President and CEO Karen Ignagni pushed back with this statement:

 

"Health insurance premiums are increasing because of soaring prices for medical services, the impact of younger and healthier people dropping their insurance during the weak economy, and additional benefits required under the new law... 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...."

 

The DMCB thinks what should have otherwise been a tempest in an insurance teacup blossomed into something much bigger.  That's because this was never about an unjust intrusion by HHS into free speech rights or a health insurance 101 lesson by AHIP. 

Rather, this is about growing threat to the ACA:

 

a) Ms. Sebelius was really seeking political advantage in an ongoing battle to shore up a star-crossed health reform bill. By picking an otherwise unnecessary fight that demonizes an opponent, it appears the Administration thinks the ACA is in trouble.   

 

b) AHIP's testy public response reflects an emboldened industry that now thinks the ACA may be vulnerable.  Even worse, it is no longer afraid of the Administration.
 
The DMCB expects more of this dysfunction in the future.  It makes for great blogging, but unfortunately, the American people deserve better.