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Statements On Introduced Bills And Joint Resolutions

Floor Speech

Date: March 4, 2010
Location: Washington, DC


By Mrs. FEINSTEIN (for herself, Mrs. Boxer, Mr. Whitehouse, Mr. Reed, and Mr. Sanders):

S. 3078. A bill to provide for the establishment of a Health Insurance Rate Authority to establish limits on premium rating, and for other purposes; to the Committee on Health, Education, Labor, and Pensions.

Mrs. FEINSTEIN. Mr. President, I rise to introduce legislation to create a Health Insurance Rate Authority and rate review process to protect American consumers from unfair health insurance rate increases.

This legislation is based on an amendment I filed during the health reform debate. While it was not included in the reform legislation that passed the Senate, I strongly believe consumers need additional protections from insurance company abuses now.

I am pleased that President Obama has included it in his health reform proposal, and I look forward to continuing to work with the administration to see that this bill becomes law.

This bill ensures that all American consumers are protected by a rate review process, not just those in states with aggressive laws.

This legislation requires companies to submit justifications for unreasonable increases in premiums, using a process that will be established by the Secretary, in conjunction with States.

The bill gives the Secretary of HHS authority to deny or modify premium increases or other rate increases, like deductibles, that are found to be unjustified. State Insurance Commissioners will retain this power in states in which they have sufficient authority and capability.

To help the Secretary with this process, the legislation establishes a Health Insurance Rate Authority as an advisory body for all the Secretary's rate review responsibilities.

Health insurance companies continue to demonstrate their willingness to slap consumers with astronomical increases in their health insurance rates.

Anthem Blue Cross has notified thousands of Californians that they will face rate increases of as much as 39 percent. Meanwhile, WellPoint, the corporate parent of Anthem Blue Cross, earned a $4.7 billion profit in 2009.

I find this unbelievable. Imagine the typical family, or individual, trying to find the money to pay 39 percent more for health care coverage. Especially during these difficult economic times, with so much uncertainty. Meanwhile, the health insurance company is doing better than ever.

I would like to share a few of the letters and comments I have received from Californians that vividly describe what these increases mean to them.

Arthur Hirsch, 63, and his wife Eileen have had Blue Cross for 30 years. They live in Laguna Beach and own a small business. They recently received notice that their monthly premiums would increase from $787 per month to $1,035 per month. Arthur said he was told that he could raise his annual deductible to $5,000 or higher to keep the premium increases down. But he said he fears he is stuck with the policy. He said: ``I can't leave my assets and my family uncovered. If something happens ..... well that's what insurance is about.''

A Monterey, CA couple recently found out their premiums with Anthem
Blue Cross will increase 36 percent--from $734 a month to $998 a month. They own an antique print business. The economy has hurt sales--their 2008 gross household income was $42,000, and they don't expect their income will increase much in 2009 or 2010. More than 25 percent of their household income goes toward premiums--far more than their mortgage. They are wondering if they should go into debt, use the equity in their home or withdraw money from their retirement accounts to pay for the rate hikes. Because of pre-existing conditions, the woman is a breast cancer survivor, they don't believe they can get a more affordable policy elsewhere.

A family of four from Pacific Palisades, California, has a $5,000 per person deductible. They pay $917 per month premiums for the family--$11,000 per year. Their insurance plus out of pocket expenses were more than 25 percent of the family's gross income for each of the past 2 years and no member of the family ever satisfied the deductible. They just received notice that their premium will go up 38 percent, to $1,263 per month. Anthem offered this family another deal: increase premium payments just 10 percent to $1,011 a month if the family agrees to an increased deductible of $7,500 per person. The father in the family hasn't had a checkup in 6 years. He's 56 years old.

This is not how our system should function.

In some States, insurance commissioners have the authority to review health insurance rates and increases, and block the rates that are found to be unjustified. According to a 2008 Families USA report, 33 States have some form of a prior approval process for premium increases.

The same report describes several notable successes among states that use this process, including: Regulators in North Dakota were able to reduce 37 percent of the proposed rate increases filed by insurers.

Maryland used their State laws to block a 46 percent premium increase after a company charged artificially low rates for 2 years. The decision was upheld in court.

New Hampshire regulators were able to reduce a proposed 100 percent rate increase to 12.5 percent.

But in other States, including California, insurance commissioners do not have this ability. Instead, my State's insurance commissioner has had to ask Anthem/Blue Cross to delay its proposed increase in premiums. He has no authority to order this delay.

Some States have laws like this on the books, but do not have sufficient resources to review all the rate changes that insurance companies propose.

Consumers deserve full protection from unfair rate increases, no matter where they live.

This legislation ensures that all Americans have some level of basic protection. The bill is based in part on a provision included in the Senate's version of health reform legislation, which required insurance companies to submit justifications and explain increases in premiums. They must submit these justifications to the Secretary of Health and Human Services, and they must make these justifications available on their website.

The bill asks the National Association of Insurance Commissioners to produce a report, detailing the rate review laws and capabilities in all 50 States. The Secretary of HHS will then use these findings to determine which States have the authority and capability to undertake sufficient rate reviews to protect consumers.

In States where Insurance Commissioners have authority to review rates, they will continue to do so.

In States without sufficient authority or resources, the Secretary of HHS will review rates, and take any appropriate action to deny unfair requests.

This could mean blocking unjustified rate increases, or requiring rebates, if an unfair increase is already in effect.

This will provide all American consumers with another layer of protection from an unfair premium increase.

The amendment would also require the Secretary of Health and Human Services to establish a Health Insurance Rate Authority as part of the process in the bill that enables her to monitor premium costs.

The Rate Authority would advise the Secretary on insurance rate review and would be composed of seven officials that represent the full scope of the health care system including: at least two consumers; at least one medical professional; and one representative of the medical insurance industry.

The remaining members would be experts in health economics, actuarial science, or other sectors of the health care system.

The Rate Authority will also issue an annual report, providing American consumers with basic information about how insurance companies are behaving in the market. It will examine premium increases by State, as well as medical loss ratios, reserves and solvency of companies, and other relevant behaviors.

This data will give consumers better information, enabling them to make better choices and avoid purchasing plans from companies that do not provide them the best value for their dollar.

This concern about premium increases stems from the fact that we are the only industrialized nation that relies heavily on a for-profit medical insurance industry to provide basic health care. I believe, fundamentally, that all medical insurance should be not for profit.

The industry is focused on profits, not patients. It is heavily concentrated, leaving consumers with few alternatives when their premiums do increase.

As of 2007, just two carriers--WellPoint and UnitedHealth Group--had gained control of 36 percent of the national market for commercial health insurance.

Since 1998, there have been more than 400 mergers of health insurance companies, as larger carriers have purchased, absorbed, and enveloped smaller competitors.

In 2004 and 2005 alone, this industry had 28 mergers, valued at more than $53 billion. That is more merger activity in health insurance than in the 8 previous years combined.

Today, according to a study by the American Medical Association, more than 94 percent of American health insurance markets are highly concentrated, as characterized by U.S. Department of Justice guidelines. This means these companies could raise premiums or reduce benefits with little fear that consumers will end their contracts and move to a more competitive carrier.

In my State of California just two companies, WellPoint and Kaiser Permanente, control more than 58 percent of the market. In Los Angeles, the top two carriers controlled 62 percent of the market as of 2008.

Record levels of market concentration have helped generate a record level of profit increases.

Between 2000 and 2007, profits at 10 of the largest publicly-traded health insurance companies soared 428 percent--from $2.4 billion in 2000 to $12.9 billion in 2007.

The CEOs at these companies took in record earnings. In 2007, these 10 CEOs made a combined $118.6 million.

The CEO of CIGNA took home $25.8 million.

The CEO of Aetna took home $23 million.

The CEO of UnitedHealth took home $13.2 million and the CEO of WellPoint took home $9.1 million.

Even last year, a time of enormous economic distress for average Americans, was a good year for the health insurance industry. According to Health Care for America Now!, the 5 largest health insurers--WellPoint, United Health, Humana, Cigna, Aetna--saw profits increase 56 percent from 2008 to 2009, from $7.7 billion to $12.1 billion. Only Aetna saw their profits decrease.

Yet we see insurance companies like Anthem/Blue Cross, owned by Well Point, increasing consumer premiums.

Frankly, I would go further than this legislation if I could: I believe the health insurance industry should be non-profit. There is no reason that any company or shareholder should make a penny off of basic health care coverage for our citizens.

But we do have a system that heavily relies on for-profit insurance companies. Regardless of the outcome of the broader debate on health care reform, that is unlikely to change.

So this bill becomes very necessary. Premiums are increasing every day, and people in many states have no recourse, and no way to know if a particular increase is unfair.

This cannot continue. I urge my colleagues to join me in supporting this legislation.

Mr. President, I ask unanimous consent that the text of the bill be printed in the RECORD.

There being no objection, the text of the bill was ordered to be printed in the Record