Senators: New Legislation Needed To Fix ‘Gaping Hole’ In Healthcare Reform

Less than a month after President Obama signed healthcare reform, lawmakers emphasized the need for additional legislation to prevent insurers from arbitrarily raising premiums until provisions of the new law take effect in 2014.

At issue are the steep increases in the rates consumers are forced to pay for health coverage, such as a 39-percent jump that Anthem Blue Cross proposed to inflict on 800,000 Californians.

Even as Anthem proposed to jack up rates on its customers, its parent company, WellPoint, recorded a $4.7 billion profit in 2009, and WellPoint’s CEO received $13.1 million in compensation, or a 51 percent increase.

“Imagine the typical family, or individual, trying to find the money to pay another 39 percent for health care coverage — especially during these difficult economic times, with so much uncertainty,” says Sen. Dianne Feinstein (D-Calif.), whose measure to prevent such increases was not included in healthcare reform due to procedural reasons.

Obama signed sweeping a sweeping new healthcare reform package last month at the White House. However, it finally was considered in Congress under a procedure known as reconciliation, to prevent a GOP filibuster. Reconciliation, however, limited what lawmakers were able to include in the final legislation.

The Anthem/WellPoint case isn’t unique, Feinstein notes.

Blue Cross/ Blue Shield of Michigan requested a 56 percent increase in individual market plans last year, while Regency Blue Cross Blue Shield of Oregon requested a 20 percent premium increase. Three insurance plans in Rhode Island requested increases ranging from 13 percent to 16 percent, and Anthem requested a 24 percent increase for plans in the individual market in Connecticut. Regulators approved only a 16.5 percent increase.

Feinstein says premium increases will continue until 2014, when newly created healthcare exchanges will give customers new tools to compare plans, and force companies to be more competitive.

The solution is new legislation to give the secretary of health and human services authority to block premium or other rate increases deemed to be unreasonable.

“In many states, insurance commissioners already have this authority,” Feinstein says. “In some states, commissioners have this authority for some insurance markets and not others. And in about 20 states, including California, companies are not required to receive approval for rate increases before they take effect.”

Feinstein’s bill was the subject of a hearing Tuesday in front of the Senate Health, Education, Labor and Pensions (HELP) Committee.

Feinstein says her bill would create “a federal fallback,” allowing the HHS secretary to conduct reviews of potentially unreasonable rates in states where an insurance commissioner does not already have the authority or capability to do so.

“The secretary would review potentially unreasonable premium increases and take corrective action. This could include blocking an increase, or providing rebates to consumers,” she says.

Some 22 states in the individual market, and 27 states in the small group market, do not require a review of premiums before they go into effect, says Sen. Tom Harkin (D-Iowa), chairman of the HELP panel.

“This is a gaping hole in our regulatory system, and it is unacceptable,” he says. ” All consumers and small businesses are entitled to a rigorous and objective review of premiums to ensure that they are reasonable. And if that review determines that premiums are unjustified – that insurance companies are just trying to run up profits – corrective action must be taken.”

Not surprisingly, the main insurance lobby in Washington, America’s Health Insurance Plans (AHIP), has come out against the Feinstein bill, characterizing its effect as “setting arbitrary caps,” according to AHIP President Karen Ignagni.

The publisher of the news site On The Hill, Scott Nance has covered Congress and the federal government for more than a decade.

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One Response to Senators: New Legislation Needed To Fix ‘Gaping Hole’ In Healthcare Reform

  1. I really like DiFi. I don’t agree with her all of the time but she’s always stood strong on healthcare and women’s rights.