Feinstein Wants to Stop Insurance Rate Hikes across the Country

Published: Mon 22 Feb 2010

Larry Roth

Senator Dianne Feinstein (D-Calif.) announced Friday that she intends to propose legislation that would block health insurance companies from issuing insurance premium rate hikes deemed unjustified by the Secretary of the Health and Human Services Department.

Feinstein's bill would develop a national Medical Insurance Rate Authority that could prevent such rate increases. The senator's announcement comes on the heels of reports that Anthem Blue Cross planned to hike up premiums by as much as 39 percent on some California policyholders.

The HHS published a report on Thursday that found health insurers have asked for drastic premium increases in the past year in many states besides 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," Feinstein said 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 study by HCAN that Feinstein referred to also discovered that the five biggest insurers were enjoying some of their largest revenues by participating in Medicare but charging higher prices for the service. The insurance companies, Feinstein noted, had increased enrollment in government-subsidized insurance programs administered by private medical plans, including Medicaid and Medicare, by 668,000, commenting that insurance executives see participation in public programs as a "great opportunity" because purchasers of private plans are being driven out of the market with high prices.

The office of Senator Feinstein said the bill would accomplish the following:

• Require insurers to justify unreasonable rate increases using a process to be determined by the HHS Secretary.
• Provide the Secretary the power to reject or modify health insurance premium increases found to be unmerited.
• Require the Secretary to decide whether states have the capacity to perform rate reviews. To help the Secretary, the National Association of Insurance Commissioners will provide a report that investigates current rate authority, capabilities, and current rate review actions.