Sebelius calls for more insurance oversight

Health and Human Services Secretary Kathleen Sebelius told a House panel Wednesday that a government-run health care plan is needed to keep in check the private insurance industry, which she says wields too much power and often fails to best serve the public.

“The president is committed to - and I’m committed to - a design that needs to level the playing field, and it’s on two fronts,” Mrs. Sebelius said while testifying during a House Ways and Means Committee hearing on health care reform.

Those two fronts include a more regulated private sector and a government-run “public option” insurance plan, which President Obama and congressional Democrats say would provide needed competition for the private insurance market.

Private insurers too often cherry-pick the healthiest customers as a way to lower operating costs, said Mrs. Sebelius, who supports instituting restrictions that would prohibit medical insurers from denying coverage to at-risk persons.

“Getting rid of some of the pre-existing medical-condition barriers that allow [for] a skewed marketplace is important,” the former Democratic Kansas governor said. “But having a [public] option for individuals, having a choice for the Americans who don’t currently have coverage, and having competition to drive the best practices … I think can be very positive in the long run.”

The secretary’s comments come as liberal health care advocates increasingly have pressured the White House and Capitol Hill Democrats for a strong government-run health care option.

Former Democratic National Committee Chairman Howard Dean, who wields considerable influence among his party’s left wing, said Monday that Democrats and Mr. Obama will suffer politically if they don’t strike more boldly on health care.

Mr. Dean, a former Vermont governor and a 2004 presidential candidate, said activists must make it clear to the Democrats who won’t back a public option to the plan “that your vote is going to be connected to how they do on health insurance.”

“The election of Barack Obama has turned over this country to a new generation,” he said. “We’re going to have an all-out fight about this … . We’re not going to go down again.”

The private health insurance industry has said it would be willing to stop charging higher rates for customers with health risks in exchange for a government mandate that people buy insurance.

“If we can get everybody in the health care system we can do the market reforms [Mrs. Sebelius] is talking about,” said Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, one of the nation’s largest insurance lobbyists.

The U.S. Chamber of Commerce said it fears a government-run health insurance option would force many - if not most or all - private insurers out of business.

“The chamber agrees with Secretary Sebelius, but the solution is not to create a new entitlement plan,” said chamber spokesman James Gelfand. “The solution is aggressive regulation within the private insurance industry, and they’ve already accepted that.”

Mrs. Sebelius’ comments came a day after Sen. Charles E. Schumer, New York Democrat, said private health care insurers enjoy too much regulatory freedom.

“You don’t want a public plan to have an unfair advantage, I agree. But just as bad as a public plan with an unfair advantage is a proposal with no public plan at all,” said Mr. Schumer during a Senate Finance Committee health care hearing.

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