Four of the nation’s largest health insurance companies have about a week to justify to a Senate committee their pricing practices.

Tom Harkin

Sen. Tom Harkin (D-Iowa) announced that the Senate Health, Education, Labor and Pensions (HELP) Committee will investigate those practices amid reports that small businesses face premium rate increases of 15% for the coming year. Harkin’s announcement came during the opening minutes of the committee’s “Increasing Health Costs Facing Small Businesses” hearing.

“At this hearing, I would have liked to question health insurance companies about these trends and practices,” he said, according to a transcript. “But not surprisingly, insurance companies are not interested in discussing them. …Health insurance companies should open their books and explain to the American people why they support a health insurance market for small businesses that is so dysfunctional, and so lacking in transparency.”

Harkin has sent letters to Humana, UnitedHealth Group, WellPoint and Aetna, asking them for a list of information before Nov. 17, including how each insurer sets initial or renewal premium rates, all the factors used and how those factors affects the premium rate. Harkin is also seeking premium rate increases filed by the companies for 2010, the anticipated medical loss ratio for the coming year and a list of those in each company whose annual compensation exceeds $5 million, according to the text of the letters.

“For a small businesses’ premiums to skyrocket, all it takes is one diagnosis for one employee – or the spouse of an employee,” Harkin said. “All it takes is one older employee, a drop in the number of employees in the business, or a pre-existing condition.”

Harkin’s inquiry is not the only one facing a major health insurer, after Sen. John “Jay” Rockefeller (D-W.Va.), chairman of the U.S. Senate Committee on Commerce, Science and Transportation, sent a letter to CIGNA CEO Edward Hanway, seeking more information about how the insurer spends consumer health care premium dollars.

Rockefeller said his committee found “serious inconsistencies” in the way CIGNA and its subsidiaries provide business information to the public and state regulators.

“The data released in this letter reveals that while health care costs are spiraling upwards, consumers are paying more and getting less, and the health insurance industry doesn’t want anyone to know what they are up to,” Rockefeller said in a statement. “The American people deserve to hear the truth. CIGNA’s apparent failure to accurately report its business activities is just another disturbing example of why we need more transparency and accountability in the health insurance industry. I am going to continue fighting the big health insurance companies as we move health reform to the Senate floor and conference and I will not stop until all Americans get a fair shake.”