Obama’s One-Two Punch for Consumers

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I'm starting to recognize that guy behind the podium. President Obama took a strong stand for consumers not once, but twice, yesterday, first when he did an endrun around Wall Street (and Senate) obstructionists to finalize the appointment of his nominee to head the new financial consumer watchdog agency, and again when his Dept. of Health and Human Services rejected efforts by health insurance companies (and politicians in Kansas and Oklahoma) to evade rules in the health reform law that makes them spend most of our premiums on actual health care.

I blogged yesterday about the recess appointment of Richard Cordray (which we called for back in July), and the extreme distress on Wall Street that the agency charged with protecting us from shady dealings and outright fraud in our mortgages, credit cards, student loans, bank accounts and other financial dealings has full powers and someone running the ship.

In two letters submitted to HHS last year, we argued in favor of the step the administration took against the health insurance industry yesterday to preserve the critical consumer protection rule that requires insurers to spend at least 80% of premiums on actual health care. Health insurers are fighting to wipe out this part of the health reform law, which is the only provision that can limit waste, executive salaries and outsized profits to make health insurance more affordable. Kansas and Oklahoma, where state politicians are fighting to overturn the health reform law at the Supreme Court, applied to allow insurers to avoid that rule. They claimed that health insurers would leave the state or go bankrupt if they had to comply. HHS called their bluff, finding in Oklahoma that:

Based on the information provided, issuers in Oklahoma’s individual market are able to meet the 80 percent medical loss ratio standard in the near future. Specifically, Oklahoma’s application makes it clear that:

  • There is no basis to conclude, based on the information provided, that there is a reasonable likelihood that any of these issuers may leave the market.
  • Evidence shows that all issuers in the Oklahoma individual market either 1) already meet the 80 percent MLR standard, 2) intend to price their products to meet the 80 percent MLR standard, and/or 3) are sufficiently profitable to absorb the impact of rebate payments under an 80 percent MLR standard.

In our letter opposing Oklahoma's application, we wrote:

Oklahoma has failed to show that its insurance companies would be unable to either pay rebates to consumers or make their business models more efficient. Indeed, the state’s insurers report that they are well on that path, with every company expected to comply with MLR regulations by 2013.

Our letter opposing the Kansas waiver (find it here), and the administration's findings, were similar.

These are the seventh and eighth requests the administration has rejected from states seeking to chip away at the health reform law on behalf of the insurance industry.

These are the kind of principled actions against Wall Street and health insurer greed that consumers expect from the president. Keep them coming Mr. President.

Carmen Balber
Carmen Balber
Consumer Watchdog executive director Carmen Balber has been with the organization for nearly two decades. She spent four years directing the group’s Washington, D.C. office where she advocated for key health insurance market reforms that were ultimately enacted into law as part of the Affordable Care Act.

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