While not included in sweeping federal health reform, the head of the Senate’s health committee said “we can and should do more” to protect consumers from unjustified premium increases.
Tom Harkin
Sen. Tom Harkin (D-Iowa), chairman of the Senate Health, Education, Labor and Pensions (HELP) Committee, made the statement following a hearing today (April 20) on health insurance rate increases that included testimony from Karen Ignagni, president of America’s Health Insurance Plans, and Michael McRaith, director of the Illinois’ Department of Insurance.
Harkin noted that while the Patient Protection and Affordable Care Act is now law, “we all know, health reform is not complete with the signing of a bill, and we are fully committed to ensuring a smooth and successful implementation.”
He added that while a major goal of health reform is to reduce the cost of health care and premiums, the focus of the hearing was on current market conditions and “ensuring that premiums are justified – that working families’ hard-earned dollars are going toward premiums that truly reflect the cost of health care.”
Harkin clarified that no one on the committee is talking about caps on premiums or imposing price controls, but rather consumer protection “from insurance companies’ jacking up premiums simply because they can.
“Protections must be in place to ensure that insurance companies do not take advantage of current market conditions before health reform fundamentally changes the way they do business in 2014,” he said.
Federal reform law includes a provision, set to take effect in 2011, that insurers spend at least 80% of premium revenue on actual health care, versus “administrative costs” as part of their medical loss ratio, and that the Congressional Budget Office has said that change will help lower premiums.
Health reform not the end
“While all of this will benefit consumers tremendously – and very soon – we can and should do more,” Harkin said. “Currently, about 22 states in the individual market, and 27 states in the small-group market, do not require a review of premiums before they go into effect – and perhaps even more.”
McRaith testified about Illinois, one of those states that does not require premium rate reviews.
“Even without the improvements from [federal reform], health insurance consumers in Illinois would benefit from health insurance rate regulation,” McRaith testified. “Most Illinois families scrape and save to pay premiums with hard-earned dollars. Small businesses, trying to retain skilled employees to facilitate growth, spend income earned through dreams, sweat and dedication just to offer meaningful health insurance to those employees.”
Harkin said all consumers and small businesses “are entitled to a rigorous and objective review of premiums to ensure that they are reasonable.
“And if that review determines that premiums are unjustified – that insurance companies are just trying to run up profits – corrective action must be taken,” he said.
Harkin praised Sen. Dianne Feinstein (D-Calif.) for her work on The Health Insurance Rate Authority Act of 2010, legislation that would have given the U.S. Secretary of Health and Human Services the authority to deny or modify premium or rate increases deemed to be unjustified and create a national Health Insurance Rate Authority.
The idea, also praised by President Barack Obama, was initially included in his reform plan and embraced by the National Association of Insurance Commissioners, if it complemented, not replaced, state-based regulation.
Harkin noted that “because of procedural rules,” it was not included in the final federal reform law, “but make no mistake: we are redoubling our efforts, and we are committed to ensuring that unjustified premiums are corrected in every state.”
In her testimony, Ignagni highlighted many current efforts by health insurers to control premiums, but again noted that any cost containment measures needed to include a full look at medical costs across the board, not just insurance.
“Our members remain strongly committed to working with the committee to ensure the successful implementation of the new health reform law, while also working to slow the growth of underlying medical costs to make health insurance more affordable,” she said.
Senate Democrats pitch plan to rein in rising health insurance premiums via IFAwebnews.com .
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