Obama Administration Drops 'Gag Order' on Private Health Insurer

The federal government, in the face of allegations it was trampling on free speech, has closed its investigation of a major insurance company for allegedly trying to scare seniors with a mailer warning they could lose important benefits under President Obama's health reform plan.

U.S. health officials announced Friday that private insurers can send seniors information on health-related issues as long as they allow their members to opt out of receiving the communications, apparently ending its probe of Humana.

"While we feel it is important to protect Medicare beneficiaries from potentially unwelcome marketing and other communications, we also recognize plans' interest in contacting their enrollees on issues unrelated to the specific plan benefit that they contract with CMS to provide to those enrollees," Teresea DeCaro, acting director of the Centers for Medicare and Medicaid Services Medicare Drug and Health Plan Contract Administration Group, wrote in a memo.

Republicans, who had slammed Obama officials for launching the probe, welcomed the news but still expressed concerns.

"I am relieved that the administration is no longer misusing its regulatory authority to prohibit plans from communicating to seniors factual information about the Medicare cuts in health care reform," Rep. Dave Camp, the senior Republican on the House Ways and Means Committee, said in a written statement.

"However, I remain concerned that CMS overstepped in issuing its gag order as a result of undue political pressure to penalize anyone who dare speak out against the Democrats' health care bill," he said. "We still need to get the answers to how and why this gag order was issued."

The Health and Human Services Department launched its investigation of Humana after the Louisville-based company mailed a letter to patients enrolled in its Medicare Advantage plans -- private options that replace standard Medicare -- warning that Obama's health overhaul slash essential benefits of the program.

The mailer prompted a complaint from Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, which passed its health care bill this week and would cut Medicare and Medicaid spending by about $500 billion over 10 years. The Montana Democrat says that would lead to greater efficiency, not reduced benefits.

The Humana mailer at the heart of the controversy said that while those 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, though that seems unlikely to happen in light of Friday's reversal.

Republicans argued that the federal government was seeking to silence a health provider that disagrees with the administration.