By Emily Ethridge, CQ Staff
April 20, 2010 -- Responding to public anger over double-digit rate hikes for health insurance, a Senate panel heard testimony Tuesday about legislation that would give the federal government authority to block rate increases in states that lack such power.
Bill sponsor Dianne Feinstein, D-Calif., warned that more insurance companies may follow the lead of Anthem Blue Cross, which recently hiked rates 39 percent for some California customers, before the new health care overhaul (PL 111-148, PL 111-152) begins to take full effect in 2014.
"There is a gaping hole in our regulatory system, and it is unacceptable," said Tom Harkin, D-Iowa, chairman of the Senate Health, Education, Labor and Pensions Committee.
Feinstein's bill (S 3078) would allow the secretary of Health and Human Services to review premium increases in states where the insurance commissioner does not have sufficient authority to do so, and to block or modify them before they go into effect. The secretary also could take corrective actions such as providing rebates to consumers affected by large increases.
Under the new health care law, insurance companies must use the vast majority of money from premiums to pay for medical claims — 85 percent for large groups and 80 percent for small groups and individuals. The federal government can review rate increases, including an annual review of potentially "unreasonable" hikes.
But the government cannot halt spikes in premium rates like the one proposed by Anthem.
"Less responsible companies are going to attempt to price out people who are sick or injured, or might become sick or injured by 2014," Michael T. McRaith, director of the Illinois Department of Insurance, told the Health, Education, Labor and Pensions Committee on Tuesday.
Panel Republicans oppose the measure, saying insurance commissioners in many states already are allowed to block rate increases they deem excessive. Additional federal intervention would be unnecessary and unhelpful, the GOP members said.
"This is another Washington takeover of state responsibility," said Lamar Alexander, R-Tenn.
Prospects Uncertain
Insurance companies said the true drivers of health care costs are more expensive medical services, and neither the health care law nor Feinstein's proposal would adequately address that issue.
Karen Ignagni, president and chief executive of the insurance industry group America's Health Insurance Plans, requested that Congress wait to see the effects of the current health care law before trying to address its suspected shortcomings.
The group is "very concerned about the prospect of new legislation," Ignagni said.
Harkin acknowledged that rate review is not a panacea for rising costs, but he quoted the National Association of Insurance Commissioners, which said that "rate review authority is an important tool for regulators, and can help keep insurance companies honest."
He also noted that about 22 states in the individual market and 27 states in the small-group market do not currently require a review of premiums before they go into effect.
President Obama had included Feinstein's proposal in his blueprint for the health care overhaul. Lawmakers left it out, however, when the Senate parliamentarian ruled that the language would not survive a challenge under procedural rules.
Harkin told reporters he would try to "get this bill moving" this year, adding that there is "more support than opposition" to the measure in the Senate.
Feinstein, however, seemed less certain about the bill's prospects. She said she may offer the legislation as an amendment to another bill, but she did not specify which one.
John Reichard contributed to this story.
April 20, 2010 -- Responding to public anger over double-digit rate hikes for health insurance, a Senate panel heard testimony Tuesday about legislation that would give the federal government authority to block rate increases in states that lack such power.
Bill sponsor Dianne Feinstein, D-Calif., warned that more insurance companies may follow the lead of Anthem Blue Cross, which recently hiked rates 39 percent for some California customers, before the new health care overhaul (PL 111-148, PL 111-152) begins to take full effect in 2014.
"There is a gaping hole in our regulatory system, and it is unacceptable," said Tom Harkin, D-Iowa, chairman of the Senate Health, Education, Labor and Pensions Committee.
Feinstein's bill (S 3078) would allow the secretary of Health and Human Services to review premium increases in states where the insurance commissioner does not have sufficient authority to do so, and to block or modify them before they go into effect. The secretary also could take corrective actions such as providing rebates to consumers affected by large increases.
Under the new health care law, insurance companies must use the vast majority of money from premiums to pay for medical claims — 85 percent for large groups and 80 percent for small groups and individuals. The federal government can review rate increases, including an annual review of potentially "unreasonable" hikes.
But the government cannot halt spikes in premium rates like the one proposed by Anthem.
"Less responsible companies are going to attempt to price out people who are sick or injured, or might become sick or injured by 2014," Michael T. McRaith, director of the Illinois Department of Insurance, told the Health, Education, Labor and Pensions Committee on Tuesday.
Panel Republicans oppose the measure, saying insurance commissioners in many states already are allowed to block rate increases they deem excessive. Additional federal intervention would be unnecessary and unhelpful, the GOP members said.
"This is another Washington takeover of state responsibility," said Lamar Alexander, R-Tenn.
Prospects Uncertain
Insurance companies said the true drivers of health care costs are more expensive medical services, and neither the health care law nor Feinstein's proposal would adequately address that issue.
Karen Ignagni, president and chief executive of the insurance industry group America's Health Insurance Plans, requested that Congress wait to see the effects of the current health care law before trying to address its suspected shortcomings.
The group is "very concerned about the prospect of new legislation," Ignagni said.
Harkin acknowledged that rate review is not a panacea for rising costs, but he quoted the National Association of Insurance Commissioners, which said that "rate review authority is an important tool for regulators, and can help keep insurance companies honest."
He also noted that about 22 states in the individual market and 27 states in the small-group market do not currently require a review of premiums before they go into effect.
President Obama had included Feinstein's proposal in his blueprint for the health care overhaul. Lawmakers left it out, however, when the Senate parliamentarian ruled that the language would not survive a challenge under procedural rules.
Harkin told reporters he would try to "get this bill moving" this year, adding that there is "more support than opposition" to the measure in the Senate.
Feinstein, however, seemed less certain about the bill's prospects. She said she may offer the legislation as an amendment to another bill, but she did not specify which one.
John Reichard contributed to this story.