Senate Committee Holds Hearing on Limiting Insurance Premium Increases

On Tuesday, the Senate Health, Education, Labor and Pensions (HELP) Committee held a hearing to discuss ways to limit “unreasonable” health insurance premium increases. Although panelists testified about various means to contain health insurance costs, the thrust of the hearing focused on legislation recently introduced by Sen. Dianne Feinstein (D-CA) and Rep. Janice Schakowsky (D-IL) that would prevent insurance companies from enacting unfair health premium rate increases. This bill, the Health Insurance Rate Authority Act of 2010 (S. 3078, H.R. 4757), would provide the U.S. Secretary of Health and Human Services (HHS) with the authority to deny or modify premium or rate increases that are found to be unjustified. The bill also would create a national Health Insurance Rate Authority to advise the Secretary of HHS. In addition, according to a press release, this bill would do the following:

• Require companies to justify potentially 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 unreasonable. State insurance commissioners that have the authority and capability to conduct rate reviews will retain this ability;
• 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; and
• Establish a Medical Insurance Rate Authority to advise the Secretary. This advisory group would be comprised of seven members – two consumer representatives, one insurance industry representative, one physician, and three additional experts in the fields of health economics, actuarial science or other sectors of the health care system.

In her testimony, (pdf) Sen. Feinstein urged the Committee to “consider and approve this legislation as quickly as possible.”

While some hearing speakers, including Phyllis Menke, City Clerk of Fonda, Iowa, and Michael T. McRaith, Director of the Illinois Department of Insurance, decried the rise in the cost of health insurance premiums and expressed support of Feinstein’s bill, others questioned the ability of the federal government to provide sufficient relief. Grace-Marie Turner, President of the Galen Institute, a non-profit research organization, testified (pdf) that she did not believe the newly-enacted Patient Protection and Affordable Care Act of 2010 (PPACA) would adequately contain costs. She emphasized that “[c]apping premiums without recognizing the forces that are driving up costs would be like tightening the lid on a pressure cooker while the heat is being turned up.” Turner claimed that private-sector initiatives and genuine competition would provide a better method of cost containment.

Witness Karen Ignagni, President and CEO of America’s Health Insurance Plans, similarly expressed concern (pdf) about regulating the cost of health insurance without addressing the underlying causes of premium increases. According to the data she provided, over the past 20 years, health benefit costs have increased annually by an average of 7.2 percent, and premiums at an annual rate of 7.1 percent. Among other reforms, Ignagni urged greater health insurance cost transparency, and the development of rates that are reasonable in relation to the benefits provided. She also advocated rates that “ensure solvency, taking into account factors such as the underlying medical costs and trends facing a particular health plan, adverse selection, benefit plan changes, and demographic changes in the population covered.” Ignagni’s testimony included a chart showing all of the new regulations called for by the recently-enacted health care legislation.

This entry was written by Ilyse Schuman.