Sen. Dianne Feinstein (D-Calif.) said Friday that she plans to introduce legislation that would bar insurance companies from enacting health insurance premium rate increases that the Secretary of the Health and Human Services deems to be unjustified.
The bill would create a national Medical Insurance Rate Authority, which would be able to prevent such increases. Feinstein's announcement follows reports that Anthem Blue Cross had intended to jack up premiums for certain policyholders in California by as much as 39 percent.
A report published Thursday by HHS found that health insurance companies have requested dramatic premium hike increases over the past year in states beyond California -- 56 percent in Michigan, 24 percent in Connecticut and 23 percent in Maine.
"This is unconscionable. It places a huge burden on people who are already struggling in these tough economic times, including the estimated 700,000 Anthem Blue Cross policyholders in California," said Feinstein in a statement. "The insurance industry reaps soaring profits by piling massive financial burdens onto consumers. 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."
The HCAN study Feinstein referenced also found that the five largest insurers were reaping some of their largest profits by participating in Medicare, but charging more for the service. The insurers, Feinstein noted, had boosted enrollment in government-subsidized programs administered by private plans -- including Medicare and Medicaid -- by 688,000, noting that insurance industry executives see "great opportunity" in serving public programs because private purchasers of insurance are being priced out of the market.
Feinstein's office said that her bill would do the following:
· Require companies to justify 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 unjustified.
· 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.