In our Health Care Reform Weekly Update published on August 24, 2009, we reported that the House Energy and Commerce Committee began an inquiry into executive compensation and other business practices of the nation’s largest health insurers. On August 17, the Committee issued letters to 52 health insurance companies seeking detailed information about their business practices, with responses to requests pertaining to executive compensation due this past Friday, September 4. Since our August 24 Update, the House Energy and Commerce Committee decided to seek, from six of the 52 health insurers subject to the August 17 request, additional information pertaining to the alleged practice of insurer termination of the coverage of small businesses when their employees become ill and the amount that their health insurance claims rise.

In an unrelated inquiry, Representative Dennis Kucinich (D-MI), who chairs the domestic policy subcommittee of the House Oversight and Government Reform Committee, sent letters dated August 26, 2009 to CEOs of some of the largest health insurers asking them to testify at a September 17 hearing about “the nature, cost/benefit, and impact of administrative measures and protocols used by the health insurance industry to determine coverage.”

Most recently, on September 3, 2009, California Attorney General Edmund G. Brown Jr., announced that his office is launching an independent inquiry into how HMOs review and pay claims submitted by doctors, hospitals and other medical providers. The Attorney General indicates that this investigation is prompted by reports that California’s five largest health insurance companies are denying insurance claims at rates of up to 39.6 percent. These recent investigations are in addition to the increasing public criticisms, regulatory actions and civil lawsuits against health insurers in recent years over the practice of rescission whereby health insurers retroactively cancel health coverage due to fraud in the completion of his or her application for health insurance.

Is it coincidental that health insurers are coming under such intense scrutiny at a time when they are considered by some lawmakers as thwarting reform efforts – most notably with their opposition to a governmentrun public plan – and characterized by others as the “villains” in a complex system of risks and rewards which many health insurers admit is in need of some fixing? Even though the government is charged with investigating allegations of wrongdoing or questionable business practices from a purely political perspective, does the assault on health insurers hurt or help the President’s health reform efforts? On the one hand, it appears that the Administration and Congressional supporters of health reform may be trying to tap into dissatisfaction with the insurance industry to build public support for health reform. On the other hand, one might question whether the Administration really welcomes this negative spotlight on health insurers at a time when the President is trying to build sufficient consensus around his health care reform priorities to pass legislation by year’s end.