U.S. Senate Finance Committee Debates Junk Insurance that Allows Health Insurers to Charge More for Less Coverage

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Washington D.C. — In a hearing on threats to small business health care, the U.S. Senate finance committee is expected to hear testimony today about an over-reaching bill that would dismantle state oversight of health insurance and hard-won state HMO patients’ rights laws.

Pulitzer prize winning Los Angeles Times business columnist Michael Hiltzik writes of the bill today:

“States’ rights” is one of those political shibboleths that conservatives love to trot out to block federal initiatives they don’t care for. But they’re happy to lock it away when it proves inconvenient to something they love. Like, say, the health insurance lobby.”

Read Michael Hiltzik’s column.

Under the Senate proposal, S. 1955, insurers could replace existing coverage with inferior policies and sell them at higher rates based on a purchaser’s gender, age, or where they live — even though this type of discrimination is currently illegal under state law.

The proposal would gut state Patient Bill of Rights laws established in 41 states and remove local state oversight to replace them with weaker or non-existent federal standards. State rules at risk include laws requiring health insurance plans to provide mammography and prostate cancer screenings, diabetic supplies and an independent review if an insurer denies coverage. Click here to read an analysis of the patient protection laws likely to be overridden by S. 1955.

“This attack on states’ rights puts millions of patients and business owners at risk in a move that amounts to a frontal assault on the patients rights movement,” said Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights (FTCR). “Instead of making health care affordable, this proposal would allow health insurers to price business owners out of their current policies and instead sell junk insurance that doesn’t protect patients when they get sick.”

State Regulatory Oversight

S. 1955 would also remove the authority of state regulators to investigate consumer complaints which will mean more abuses by insurers and further devalue health insurance according to FTCR.

For example, in California, Blue Cross violated state law by retroactively canceling coverage for patients when they sought medical care. The Foundation for Taxpayer and Consumer Rights immediately petitioned the state Insurance Commissioner who pledged to investigate. Read FTCR’s petition to state regulators.

Under S. 1955, state regulators would be barred from conducting this type of investigation because the proposal would pre-empt state consumer protection laws that require insurers to pay claims fairly. New standards would be written by a federal board dominated by the insurance industry.

Medical Bankruptcy

Dana Christensen, a widow who was insured with a junk association health plan and owed more than $450,000 when her husband died of bone cancer, spoke out against the bill that would “allow insurance companies to sell junk policies that don’t protect patients when they are sick.” Had Dana not won a court judgment under state law — which would be eviscerated by S. 1955 — she would have been forced to declare bankruptcy. In the U.S., half of all bankruptcies are attributable to medical bills.

The Christensens’ story can be found in an online resource published by FTCR outlining the skeletal benefits of the junk health plans.

Though similar legislation has been proposed in past sessions and passed by the House of Representatives, the bill was approved for the first time by the U.S. Senate health committee this month.

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The Foundation for Taxpayer and Consumer Rights (FTCR) is a nonpartisan consumer advocacy organization. For more information, visit us on the web at:

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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