Reacting to the announcement that Blue Cross of California planned to raise some individual heath insurance premiums by as much as 39%, California’s Sen. Dianne Feinstein announced that she will propose legislation to curb future unilateral and unfair rate hikes.
Blue Cross did agree that they would defer the rate increases until May 1, 2010. Originally the increases were scheduled to go into effect on March 1, 2010.
Sen. Feinstein noted on her website, that “a two-month reprieve is not enough for families who could lose their health insurance plans if they can’t pay the skyrocketing premium costs.”
A review of the proposed legislation
The legislation proposed by Sen. Feinstein would empower the Secretary of Health and Human Services to review premium increases. That would be especially important in states, like California, where the Commissioner of Insurance does not have sufficient authority to review and block exorbitant rate increases.
Only 25 states do give their Departments of Insurance this kind of authority.
The Feinstein proposal would do the following:
- Give the Secretary of Health and Human Services the authority to deny or modify health insurance rate increases that are found to be unjustified.
- Require health insurance carriers to justify to the Secretary of Health and Human Services any perceived unreasonable premium increases.
- Direct the Secretary of Health and Human Services to establish a process which would review health insurance rate increases.
- Direct the Secretary of Health and Human Services to determine which states do not have the ability to conduct rate reviews. To assist the Secretary, the National Association of Insurance Commissioners (NAIC) would be directed to submit a report that examines current state authority, capabilities, and recent rate review actions.
- Establish a Medical Insurance Rate Authority to advise the Secretary. Under this proposal, the new panel would have 7 members, 2 consumer representatives, 1 insurance industry representative, 1 physician and 3 additional experts to be determined.
The White House is expected to build on this proposal today. Much of the outrage comes from reports last week that the 5 largest insurance carriers had reaped record profits in 2009.
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