Health Insurance Report™ helps you track and analyze legal, legislative, and regulatory developments affecting the health-insurance industry throughout implementation of the Affordable Care Act...
By Steve Teske
Rep. Jan Schakowsky (D-Ill.) and Sen. Dianne Feinstein (D-Calif.) March 6 introduced legislation in the House and Senate (H.R. 1019, S. 482) allowing the Department of Health and Human Services to block or change “excessive” health insurance rate increases in states that do not have the ability to do so.
The Health Insurance Rate Review Act of 2013 would establish a federal fallback rate review process giving HHS authority to block or modify rate increases “that are excessive, unjustified or unfairly discriminatory when the state insurance commissioner does not have or use the authority to do so,” according to a statement released by Schakowsky.
Under the Affordable Care Act, HHS has the authority to determine whether premium rate increases are unreasonable in states that do not conduct rate reviews that HHS finds to be adequate.
It does not have authority to overturn rate increases, but companies found to be raising rates unreasonably must post justifications on HHS's website, as well as on their own website. Under HHS's rate review regulation, the department reviews all rates of 10 percent or more to determine whether they are unreasonable (73 HCDR, 4/17/12).
The California insurance commissioner this year found a rate increase by Anthem Blue Cross to be unreasonable, but it lacked the authority to stop it, Feinstein said in the release. see previous article
The increase affected nearly 250,000 policyholders whose rates increased by up to 10.6 percent; when combined with previous increases, the average rate hike for those policyholders over two years reached 19.5 percent, she added.
“The evidence shows that health consumers benefit if they live in states where insurance regulators have and use the authority to prevent unreasonable price hikes,” Schakowsky said. “Unfortunately, in too many states, like Illinois, that authority is missing.”
Feinstein said in California and 14 other states, consumers “continue to face unreasonable health insurance rate hikes.”
“Regulators in these states lack the authority to block or modify these unjustified increases in the individual and small group markets, even when they are found to be excessive,” she said.
“Candidly, this is unacceptable,” Feinstein said. “I tried to include regulatory rate review in the health reform law that passed Congress in 2010, but without further legislative action, consumers will continue to be at the mercy of health insurance companies as their premiums grow beyond the rate of medical inflation.”
The legislation is opposed by the health insurance industry. Robert Zirkelbach, a spokesman for the industry trade group America's Health Insurance Plans, told BNA the health care reform law caps health plan administrative costs and profits and imposes new federal rate review and disclosure requirements that duplicate existing state regulations.
“To make health care coverage more affordable, the focus needs to be on the factors driving premium increases, such as rising medical costs, changes in the covered population, and new benefit mandates and regulations,” he said. “Allowing federal regulators to arbitrarily cap premiums ignores the real drivers of premium increases and could put at risk the coverage upon which consumers and employers rely.”
On another health insurance issue, House Republicans March 5 asked President Obama to support their efforts to help Americans with pre-existing medical conditions obtain affordable health care.
On Feb. 15, the Centers for Medicare & Medicaid Services said it was suspending enrollment in the Pre-Existing Condition Insurance Plan (PCIP), a $5 billion ACA program to help sick and chronically ill Americans obtain coverage through January 2014.
CMS said it was suspending enrollment because costs were much higher than initially expected (see previous article).
Seven House GOP lawmakers, including House Speaker John Boehner (R-Ohio) and Majority Whip Eric Cantor (R-Va.), asked Obama to use ACA funding to keep the program operating.
The lawmakers said the House Republican alternative to ACA provided $25 billion to help those with pre-existing conditions through programs that reformed and expanded state-based, high-risk pools and reinsurance programs.
“Our goal has been and remains full repeal of the health care law, which is driving up health care costs and making it harder for small businesses to create jobs,” the lawmakers said. “You obviously oppose repeal. But our disagreement on the broader issue of the law should not preclude us from working together to take this specific action on behalf of Americans in need of help.”
By Steve Teske
The rate review legislation is at http://www.feinstein.senate.gov/public/index.cfm/files/serve/?File_id=4d4f8bfc-e356-4871-9105-f91015f1f62c. The House GOP letter is at http://energycommerce.house.gov/sites/republicans.energycommerce.house.gov/files/letters/20130305HighRiskPools.pdf.
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