Click here to listen to audio interviews with Harvey Rosenfield and Mila Kofman.
WASHINGTON, D.C. — Health insurers should be held to account with legislation backing up prior approval of rates, U.S. Sen. Dianne Feinstein and Maine Insurance Superintendent Mila Kofman said at an event marking the release of a new insurance study by Consumer Watchdog.
Feinstein, D-CA, introduced the Health Insurance Rate Review Act, S 137, a bill to authorize the U.S. Department of Health and Human Services to reject excessive and unjustified health insurance rates if states fail to regulate rates. The bill — which Rep. Jan Schakowsky, D-Ill., introduced in the House as HR 416, would ensure that federal rules under the Affordable Care Act do not prevent state insurance regulators from imposing additional rate review requirements. In many states, regulators lack the authority to challenge rate increases that are excessive, unjustified or discriminatory, she said. Feinstein also endorsed AB 52, state legislation in California that would grant the insurance commissioner the prior approval authority he now holds for automobile and homeowners insurance (BestWire, April 27, 2011).
Feinstein, Kofman and Harvey Rosenfield, founder of the consumer advocacy organization, released a report calling for strong rate review legislation. It highlighted rates in Massachusetts, whose reform legislation was a model for the federal law. There, the individual mandate to obtain insurance coverage was not enough to limit health insurance costs, according to the report. However, steps to require insurers to justify their rates are beginning to have an effect, it said — with increases as high as 25% for some plans dropping to below 10%.
Rate review is an obligation of government in a system that relies on private insurers to cover citizens, Kofman said. Maine regulators are considering whether to merge the state's individual and small group markets in advance of the debut of state-based exchanges, she said; Kofman has authority over individual market rates, but limited reach over small group plans.
"Comprehensive rate review is critical and it will be even more critical after 2014," Kofman said.
Another benefit is that the rate review process gives regulators insight that has enforcement benefits, Kofman said. One such review returned more than $5 million from violations.
In California, outrage over health insurance rates is akin to the voter anger that made Proposition 103 law in 1988, said Rosenfield, who authored the measure. He cited recent rate hikes as high as 37.5% from Blue Shield of California as an example (BestWire, May 10, 2011). The insurer has cited new medical costs and effects of the Affordable Care Act as reasons for the increases.
"When I wrote Prop 103, health insurance was not the problem it is today," Rosenfield said.
The California bill recently cleared the Assembly Health Committee (BestWire, April 27, 2011). A similar measure failed last year, but one of its leading advocates, then-Assemblyman Dave Jones, is now the state's insurance commissioner.
Under the Affordable Care Act, rate increases of 10% or more for individual and small group plans are deemed subject to analysis. Beginning in 2012, states will set their own thresholds for mandatory disclosure of rate increases based on cost trends in that state. States with the infrastructure to conduct rate reviews will do so (BestWire, April 4, 2011).
The complete audio of interviews with Rosenfield and Kofman can be heard at: http://www.ambest.com/media/media.asp?RC=186529.
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Contact the author, Sean P. Carr, Washington Bureau Manager at: [email protected]
