CMD Calls For Federal Investigation of Health Insurers

The Center for Media and Democracy's Wendell Potter and the consumer advocacy group Consumer Watchdog are sending a joint letter to Kathleen Sebelius, the Secretary of the U.S. Department of Health and Human Services, asking the Obama administration to investigate the major for-profit health insurance companies' reductions in their proportion of spending on health care in advance of health reform, even as they spike premiums upward. The letter compares insurers’ actions to those of credit card companies, which spiked annual interest rates in advance of new federal regulations designed to protect cardholders. Judy Dugan, research director of Consumer Watchdog, said, “Insurance companies appear to be making sure that when new federal rules for spending on health care kick in next year, they can keep their administrative bloat and profits intact.” Wendell Potter, who co-signed the letter, said that red flags went up when Cigna showed a startling drop of 6.4% in its medical spending radio (also called a Medical Loss Ratio, or MLR) to 78.8%, a cut that appears unprecedented for a large insurer. You can read the entire letter to Kathleen Sebelius here (pdf).