There's no denying that administrative costs for insurance companies are out of control, and that ends up driving up premium costs. But it's not just those rising administrative costs that behind the still-increasing premium rates.

The top executives at the nation's five largest for-profit health insurance companies pulled in nearly $200 million in compensation last year — while their businesses prepared to hit ratepayers with double-digit premium increases, according to a new analysis conducted by healthcare activists. The leaders of Cigna Corp., Humana Inc., UnitedHealth Group and WellPoint Inc. each in effect received raises in 2009, the report concluded, based on an analysis of company reports filed with the Security and Exchange Commission.

The study was conducted by HCAN, which laid out the solution in the press release accompanying the story.

State and federal insurance regulators are currently considering guidelines to induce health plans to spend a greater share of their premium revenue on patient care and less on executive compensation, administration and profit. The proposal revolves around a closely-watched financial indicator known to Wall Street investors as the medical-loss ratio (MLR). The new health reform law includes a provision that requires insurers to spend on patient care at least 80 percent of health plan premiums collected from individuals and small employers and 85 percent of premiums paid by large employers. Crucial recommendations on implementation of these guidelines will be made soon to the U.S. Health and Human Services Department by the National Association of Insurance Commissioners. Most of the plans reviewed in the HCAN report continued in the second quarter of 2010 to spend lavishly on non-medical activities while reducing the share of premium dollars used for members' actual health care. The health insurance industry wants to expand the definition of allowable medical expenses to include costs that are not directly related to the delivery of care and have not historically been classified as medical. Instead of reducing costs and improving the efficiency of their operations, they simply want to change how certain expenses are classified. This approach would encourage CEOs to gouge consumers even more than they already do in order to jack up corporate profits and share prices, thereby increasing bonuses and grants of stock and stock options to them.... Strong standards for insurance company spending are needed to ensure that premiums are not jacked up merely to perpetuate bloated executive compensation. The MLR standards in the Affordable Care Act are critical to curbing the worst of the health insurance industry's consumer abuses, controlling rising premium costs, increasing the value of premiums paid by private and public customers, and reining in the profiteering of health insurance companies. To enforce the MLR standards and fulfill the promise of quality, affordable health care for all, the U.S. Department of Health and Human Services must reject the insurance industry's sophisticated efforts to undercut the law. If the rules governing medical-loss ratios, rate review and other consumer protections are implemented as intended, the health reform law will hold accountable an industry that abuses millions of customers when they need health benefits the most.

We knew that the legislative battle was just the first one, and the regulatory fight to make the Affordable Care Act actually have teeth was going to be just as tough, but a lot less public. Out-of-control compensation for CEOs and rising premium rates will hopefully make the insurance commissioners a little less amenable to the insurance company lobbying.