Consumer advocates expect federal regulators to finalize regulations this month that will allow the Department of Health and Human Services to review insurance companies’ rates.
The healthcare reform law gave HHS new powers to review “unreasonable” rate hikes, though it cannot stop increases from taking effect. Carmen Balber, Washington director for the advocacy group Consumer Watchdog, said HHS has indicated that it’s planning to release final rules on rate review before the end of the month.
The group is trying to build support for a bill, sponsored by Sen. Dianne Feinstein (D-Calif.) and Rep. Jan Schakowsky (D-Ill.), that would allow the federal government to block rate hikes from taking effect in states that do not have that authority.
Feinstein acknowledged at a press conference Wednesday that "it’s enormously difficult to get traction" in Congress for federal rate review. But major premium increases in California demonstrate the need for her bill, she said.
The insurance industry says rate review legislation wrongly targets health plans when the rising cost of healthcare services is the real driver behind premium increases.
"It is important to avoid an arbitrary and subjective rate review process that can easily become politicized," America’s Health Insurance Plans said in a statement. "Artificially capping premiums while allowing medical costs to continue to soar will destabilize the market and put at risk the coverage that families and employers rely on today."
But the healthcare law might not work without rate approval authority, Consumer Watchdog founder Harvey Rosenfield said. He pointed to the section of the law that requires insurers to spend 80 to 85 percent of their revenues on medical costs. Because the policy limits the percentage of revenues that can go toward profits, he said, insurers focused on their bottom line won't be as eager to control their spending on medical costs.
The policy, he said, "creates a perverse incentive that only regulation of premiums can unwind."