California Group Urges National Freeze On Health Insurance Rates

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President Obama should include a provision freezing health insurance rates in the package of revisions Democrats are drafting for the Senate-passed health care overhaul bill (HR 3590), a California-based consumer group said Wednesday.

Other provisions that the Consumer Watchdog group wants to see included are a requirement that state regulators approve rate increases before they go into effect, and that federal grants be made available to states for developing these "prior approval" regulations.

"Given the audacity of health insurance rate increases last year and this year, and with the economy in deep recession, only federal legislation can curb the spiral of unaffordability," said Carmen Balber, the Washington director for the group.

A group spokesman said in a telephone press briefing that legislation forcing insurers to roll back rates has been upheld by the California courts.

Imposed in the state in 1988 under Proposition 103, the measure applied to auto insurance. It also required prior approval of rate hikes. The group said Proposition 103 has saved drivers $62 billion since 1988 and should serve as a model for health insurance.

A national rate freeze would be unusual and is unlikely to be accepted by Obama. However, talk of rate regulation has grown following the attempt by the Wellpoint unit Anthem to raise rates up to 39 percent in California’s individual market.

Insurers say rate regulation doesn’t get to the root of rising premiums, which they attribute to rising medical costs and insurance pools increasingly dominated by sicker enrollees as healthier risks drop out in the troubled economy. While insurers also say they favor broader insurance pools to lower costs, they have a history of undermining state-based exchanges that try to spread risks.

Consumer Watchdog says it led the fight to enact Proposition 103 and more recently won new rules in California to ban cancellations of policies leaving sick enrollees with big unpaid medical bills.

Consumer Watchdog
Consumer Watchdog
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