Senator Dianne Feinstein (D, CA) staked claim on controlling potential unwarranted insurance rate hikes by explaining her position: “Water and power are essential for life, so they are heavily regulated, and rate increases must be approved.” Likewise, she states, “Health insurance is also vital for life. It too should be strictly regulated so that people can afford this basic need.” Some may think the claim is mostly sophistry, but the Senator has a valid point. As it stands now, there’s a gaping loop hole for insurance companies. They may be required to accept pre-existing conditions, for example, but there’s currently nothing to stop them from gouging the rates into stratospheric proportions. A major concern about the HCR bill has always been that the insurance companies would pass the rate increases — increases that would make the cost of premiums so high that even the most affluent of the middle class would struggle to afford health insurance.
Tom Harkin (D, IA), Chairman of the Senate Health Committee, said he wants to move forward on legislation to put “an important check on unjustified premiums,” and that that he intends to do so this year. He seemed favorably impressed with Senator Feinstein’s bill, as it would provide the Secretary of Health & Human Services with the authority to review premiums and block any rate increase determined to be unreasonable – and to do so at a Federal level (in cases where a state’s regulatory agency was not able to do so.) Some may complain that this infringes on the states’ sovereignty, but without such a provision, some states’ citizens would be left entirely without protection from unwarranted increases that could make their premiums unaffordable. Those states which do not have such authority to regulate at this time may now be motivated to impose their own authority, rather than be subject to Federal control.
Mr. Harkin went on to explain that “rate review authority is needed to protect consumers from insurance companies’ jacking up premiums simply because they can. Protections must be in place to ensure that companies do not take advantage of current market conditions before health reform fundamentally changes the way they do business in 2014. Currently, about 22 states in the individual market and 27 states in the small group market do not require a review of premiums before they go into effect.” Harkin expressed that there may be even more states in which this is the case, concluding “this is a gaping hole in our regulatory system, and it is unacceptable.”
Starting in 2014, the new law requires most Americans to have insurance. The idea is that by having everyone pitch in on the costs, it will be possible for health insurance providers to insure those with pre-existing conditions at the same rate as other people in their group. Insurance companies will no longer be allowed to use those conditions to deny coverage to any citizen.
Of course, the insurance industry is anything but pleased. Karen M. Ignagni, president of America’s Health Insurance Plans, insists that Congress see how the new law works on its own before adding restrictions. She complains that the real factors contributing to the cost of rising premiums includes a rapid growth of medical costs, and the supposed power of hospitals and other health care providers to dictate prices. Though the industry stands to gain from having so much of the population pitch in on the cost of health care, Ms. Ignagni claims the law imposes new requirements, taxes and fees which could further drive up costs.
It is likely that the proof is in the proverbial pudding. Mr. Harkin noted during the hearing that UnitedHealth Group, one of the nation’s largest insurers, reported a first-quarter earnings increase of 21 percent and a gross profit of $1.19 billion. While insurance companies may not continue to realize such gains once some of the larger aspects of the new law come into effect, 1.19 billion is still a lot of elbow room. The profits directly contradict AHP’s cries of unbearable burdens.
In the final analysis, some form of regulation is probably necessary to keep the insurance providers from making the cost of premiums impossible to afford, while enjoying the mandated insurance as well as unbridled profits. It was never Congress’ intent to provide the industry with an unrestricted source of obligated donors for their profit plan. For any plan to work, it must be comprehensive and balanced. Whether it is Senator Feinstein’s bill or some other, regulation is essential. Without it, any balance would be provided at the whim and grace of the very insurance corporations that are already turning large profits while crying “foul!”