Senator Feinstein Introduces Legislation to Prevent Health Insurance Companies from Enacting Unfair Premium Rate Increases
U.S. Senator Dianne Feinstein (D-Calif.) today introduced legislation to prevent insurance companies from enacting unfair health premium rate increases.
The Health Insurance Rate Authority Act of 2010 would give the U.S. Secretary of Health and Human Services the authority to deny or modify premium or rate increases that are found to be unjustified. It would also create a national Health Insurance Rate Authority to advise the Secretary of HHS.
Last month, Anthem Blue Cross of California announced plans to hike premiums for certain policyholders in California by up to 39 percent.
In addition, the U.S. Department of Health and Human Services recently revealed that health insurance companies have requested dramatic premium rate increases over the past year - for instance, by up to 56 percent in Michigan, 24 percent in Connecticut and 23 percent in Maine - and will likely continue to do so in the future.
Senator Feinstein's legislation would ensure that people in all states have access to a meaningful rate review process to protect them from unfair increases. At least 25 states give their Insurance Commissioners some type of authority to review or regulate premium hikes and other rate charges. California is not one of those states.
"Health insurance companies are raising premiums even as they take in billions in profits," said Senator Feinstein. "A 39 percent rate increase at this time of high economic uncertainty is unconscionable.
I've received nearly 1,100 emails and letters from constituents facing huge increases in their health insurance premiums. Many say they simply can't afford to pay these higher rates and still pay their mortgage, their rent or other bills. Some will be forced to cut their health care coverage altogether.
Many have been Blue Cross customers for decades. Virtually all have pre-existing conditions -- meaning that it is unlikely another insurance company will take them. So they're forced to pay Anthem's exorbitant rate hikes or forego health insurance. One Los Angeles woman wrote to me after receiving notice from Anthem that her premiums will go up 37.5 percent. She said, "This is totally out of line. They are not an insurance company but a profit making machine.'"
Here are just a few of their stories:
* A Laguna Beach couple had Blue Cross for 30 years. They 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's 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, California, 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're 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 two 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 six years. He's 56 years old.
"I recently met with the CEO and President of WellPoint. I found the company's justification for the increased premiums hard to believe," Senator Feinstein said. "It's clear to me that the health insurance industry will not change its behavior unless it's required to do so."
Rep. Jan Schakowsky (D-Ill.) has introduced a companion bill in the House.
"Health insurance companies have been leaching off Americans who are trying to make ends meet for too long," said Rep. Schakowsky. "Their unreasonable and oftentimes surprise rate increases price people out of receiving the health care they need and force them to live on a shoestring budget just to pay medical bills. We have made it clear that those practices will no longer be tolerated. We're standing up for the middle-class, seniors and everyone who wrestles with skyrocketing premiums year after year. With this measure we'll finally be able to say no when insurance companies arbitrarily raise their rates to pad their pockets, and we're going to show them for what they are."
The Senate bill is cosponsored by Senators Barbara Boxer (D-Calif.), Sheldon Whitehouse (D-RI), Jack Reed (D-RI), and Bernie Sanders (I-VT).
"This bill will help protect California's families from outrageous increases in their health insurance premiums," said Senator Boxer. "At a time when insurance company profits are soaring, it is unacceptable that working families are being hit with crippling rate increases."
According to a recent study by Health Care for America Now, America's five largest insurance companies reported record profits of $12.2 billion in 2009, an increase of $4.4 billion, or 56 percent, from 2008. And WellPoint, the parent company of Anthem Blue Cross, reported earning $2.7 billion in the fourth quarter of 2009.
Specifically the bill would:
* Require companies to justify potentially unreasonable premium increases, using a process to be established by the HHS Secretary.
* Give the Secretary authority to deny or modify health insurance rate increases that are found to be unreasonable. State insurance commissioners that have the authority and capability to conduct rate reviews will retain this ability.
* Require the Secretary to determine whether states have the capability to conduct rate reviews. To assist the Secretary, the National Association of Insurance Commissioners will submit a report that examines current state authority, capabilities, and recent rate review actions.
* Establish a Medical Insurance Rate Authority to advise the Secretary. It will have seven members -- two consumer representatives, one insurance industry representative, one physician, and three additional experts in the fields of health economics, actuarial science or other sectors of the health care system.
The authority also would issue an annual report informing American consumers about how insurance companies are behaving in the market. The report will examine premium increases by state, medical loss ratios, reserves and solvency of companies and other relevant information.