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Associated Press, Published September 21 2009

Gov't investigates health insurance company mailer

WASHINGTON - The government is investigating a major insurance company for allegedly trying to scare seniors with a mailer warning they could lose important benefits under health care legislation in Congress.

The Health and Human Services Department launched its investigation of Humana after getting a complaint from Sen. Max Baucus, D-Mont., a senior lawmaker usually viewed as a reliable ally of the insurance industry.

"It is wholly unacceptable for insurance companies to mislead seniors regarding any subject - particularly on a subject as important to them, and to the nation, as health care reform," Baucus said Monday, disclosing the HHS investigation.

The Senate committee that Baucus chairs - Finance - will vote this week on a sweeping health care plan that he's proposed to expand coverage and try to control costs. It would cut Medicare and Medicaid spending by about $500 billion over 10 years, but Baucus says that would lead to greater efficiency, not reduced benefits.

"The health care reform bill we released ... strengthens Medicare and does not cut benefits," said Baucus. "From lower prescription drug costs, to free preventive care, to better treatment for chronic conditions, seniors have so much to gain from health reform - and I'm not going to let insurance company profits stand in the way of improving Medicare for seniors."

The was no immediate comment from Humana, one of the largest private carriers serving seniors under a program called Medicare Advantage. About one-fourth of the elderly and disabled people covered under Medicare participate in the Advantage program, which offers a choice of private plans that usually deliver added benefits.

But government experts say the private plans are being paid too much - about 14 percent more than it costs to care for seniors in traditional Medicare. The Baucus plan - and other proposals - would reduce payments to the plans, and the health insurance industry is fighting back.

The Humana mailer focused squarely on the Medicare Advantage program.

"While these programs need to be made more efficient, if the proposed funding cut levels become law, millions of seniors and disabled individuals could lose many of the important benefits and services that make Medicare Advantage health plans so valuable," it said.

It urged seniors to sign up with Humana for regular updates on the health care legislation, and encouraged them to contact their lawmakers in Washington.

In a warning letter to Humana, HHS said the government is concerned that the mailer "is misleading and confusing" partly because the company's lobbying campaign could be mistaken for an official communication about Medicare benefits.

HHS ordered the company to immediately halt any such mailings, and remove any related materials from its Web site. In the letter, the government also said it may take other action against Humana.

Baucus has been a strong supporter of the industry. He's the most prominent Democrat to oppose creation of a government-sponsored insurance plan to compete with private carriers in a revamped system. During the Bush administration, he broke with his own party to support a Medicare prescription drug benefit delivered through private insurance plans, with no government role in negotiating prices.

Insurers, however, are pushing back against his plan. Not only would it cut payments to private Medicare plans, but it would also impose a $6-billion annual fee on the industry, partly to recoup profits from an influx of new taxpayer-subsidized customers.

Polls show that seniors are more skeptical of the health care overhaul than the U.S. population as a whole.

Copyright © 2009 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of The Associated Press.