Earlier today, I expressed concern that the new ‘Patient Bill of Rights’ regulations would give insurers an excuse to raise premiums while leaving the federal government relatively powerless to rein in excessive and unreasonable increases. But this afternoon, during a conference call with reporters, HHS Secretary Kathleen Sebelius stressed that the added cost of the new regulations would only amount to “less than 1%” in added costs:

SEBELIUS: We anticipate that the cumulative impact is likely to be less than 1%. The actuarial studies that our folks have asked to engage in, looking at this indicates that while there are clearly some cases where there are some expenses, relatively few and far in between given the number of people impacted and effected. Again, part of the meeting today was to call on insurance companies to use their market strategies to put people in larger pools to make sure that folks particularly in the individual and small pool markets weren’t isolated and separated as the sickest possible population.

During his remarks, President Obama conceded that while “there are genuine cost-drivers that are not caused by insurance companies,” “we’ve got to make sure that this new law is not being used as an excuse to simply drive up costs.” “None of this is designed to deprive insurance companies of fair rates. And as I mentioned when we were meeting with the CEOs, there are a lot of cost-drivers other than those that are within insurance companies’ control,” he said.

This is true enough, but many insurers simply pass overinflated costs to consumers, without negotiating for better rates, and some are already blaming the health law for premium increases. For instance, in March, CIGNA CEO David Cordani told Neil Cavuto that the law will lead to additional increases and Aetna CEO Ron Williams argued that the new taxes — which don’t kick in until 2014 — will lead to immediate premium hikes. As Sebelius explained on the call, this kind of response is fairly typical:

SEBELIUS: There is no question that we are seeing rate increases that so far exceed the costs of medical inflation in some instances that they’re difficult to justify….In my former insurance commissioner days [I] am very familiar with companies alleging costs well in access of what they ended up being every single mandate passed in my experience at the legislative level was always estimated to be well more costly than tended to be the reality. When we passed mental health parity there were assertions that somehow rates would have to go 20% to cover this. This isn’t new, this tension and dynamic. The new is we are actually calling on insurance commissioners to step up to actually conduct more rigorous rate reviews.

History suggests that insurance commissioners will in fact have to remain vigilante in challenging and reviewing proposed rates. If they don’t, I suspect rates will continue to increase well beyond medical inflation and the “estimated cumulative effect.”

Michigan’s Center for Healthcare Research & Transformation has a new report which chronicles how Michigan will benefit under the new health care law. The Center predicts that the percentages of private and public coverage will increase under the law and hundreds of thousands of small businesses would qualify for small business tax credits:

- While 28 percent of those in Michigan had public coverage in 2007/2008, under health reform, 33 percent would be eligible (and if al enrolled, covered). And while 61 percent of the state’s population had private coverage in 2007/20082, post-reform that number could grow to 65 percent assuming all who are required to purchase coverage did so (and those who currently have employer based group coverage but would be Medicaid eligible continue to retain employer based coverage).

- 58 percent of all private businesses in Michigan (about 119,375 in 2008) had fewer than 10 employees. With about 428,671 employees, these businesses employed about 12.4 percent of Michigan’s private sector. Wage data for these employers are not generally available. However, if all businesses in these size categories in Michigan were wage eligible, a total of 144,401 businesses could be eligible for the tax credit. These businesses employ approximately 766,538 employees

In the state up-roar about the added costs of reforms and the new Medicaid provisions, (particularly Republican) governors often omit the benefits they’re buying with the new spending. States are investing more dollars to cover more people and the new benefits will hopefully reduce health care costs over the long term, but also improve residents health in the short term. It may seem obvious, but all too often that gets lost in all of the complaining. Reports like this (and this) remind us that reform is paying for something worth paying for.

The administration is unveiling a package of interim regulations it’s calling the Patient’s Bill of Rights today, as President Obama warns insurers against using the interim period between now and 2014 to maximize profits and urges insurance commissioners to police unreasonable rate increases. The new rules are as follows:

- Insurers will not be able to deny coverage to children with pre-existing conditions. Adults will receive this protection beginning in 2014

- Insurers can no longer impose lifetime limits on coverage and annual limits are phased out and completely eliminated by 2014.

- Insures can only rescind coverage in instances of intentional fraud. “Unintentional mistakes on application forms cannot be used to revoke a policy.”

- Insurers cannot discriminate based on salary.

- Patients can access pediatricians and women can access OB/GYNs of their choice without referrals.

- Patients will have their choice of primary care provider within the plan’s network.

Obama is requiring insurers to accept new regulations that will increase their costs while warning them against raising premiums. The administration is hoping that today’s public scolding will shift some of the blame for the coming premium increases to insurers (where some of it rightly belongs) and encourage issuers to squeeze the providers, which is good for the whole system because it brings down costs. But I’m not sure what happens if they respond by simply passing on the increases to consumers. Unfortunately, the health care law does not give the federal government enough authority to actually prevent insurers from jacking up prices.

Back in March, the Democrats (led by Sen. Dianne Feinstein (D-CA)) attempted to establish a federal rate review board that would have allowed the federal government to review and deny excessive, unreasonable or discriminatory health insurance premium increases. Conservatives quickly labeled the effort “de facto price controls,” claiming that it would “be disastrous for the American health-care system” and the provision was ultimately dropped from the final bill after staffers determined that it clashed with the reconciliation rules. The only mechanism left for controlling premiums in the interim period are the new rate review provisions. The law allows the Secretary of Health and Human Services to assist states in developing a plan for denying rate hikes or preventing insurers with “unreasonable” hikes from participating in the exchanges and the federal government has already doled out grants to help states control premium growth.

Of course, if rates really do get out of control, Feinstein’s rate review bill will likely see a resurgence and in the meantime Democrats should take every opportunity to remind everyone that Republicans — who will use the hikes to argue that the law isn’t working — slammed the very provisions that could have controlled at least some of the increases.