Feinstein, Obama Push for HHS Authority Over Insurance Rate Hikes

On Friday, Sen. Dianne Feinstein (D-Calif.) said she intends to introduce legislation this week that would authorize the federal government to review, modify or block significant health insurance rate increases in states that do not have the power to regulate premiums, the San Jose Mercury News reports.

The move comes in response to Anthem Blue Cross of California's plans to hike premiums by as much as 39% for 800,000 individual policyholders in California beginning in May. Insurance Commissioner Steve Poizner (R) is investigating the proposed rate increases.

Feinstein Proposal Details

Feinstein's legislation would give the HHS Secretary the power to create criteria for deciding whether a rate hike is justified. The secretary then would be able to deny or change a premium increase if it is deemed too extreme (Zapler, San Jose Mercury News, 2/19).

The bill also would establish a Medical Insurance Rate Authority composed of consumers, health industry officials and physicians. The board would serve as an advisory panel to the secretary.

The legislation would apply to about 50% of all states, namely those that currently lack the authority to regulate health insurance rates.

California currently only has the authority to deny licenses to health insurers that spend less than 70% of premiums on medical benefits.

The California Department of Insurance said Feinstein's proposal would create administrative hurdles without addressing the problem of mounting health care costs (Colliver, San Francisco Chronicle, 2/20).

Obama Releases Similar Proposal

On Monday, President Obama is expected to call for giving the federal government the power to block excessive health insurance rate increases, the New York Times reports.

The proposal is part of his version of a comprehensive health reform bill, which he released as a means of framing the debate over an overhaul during the upcoming health reform summit (Herszenhorn/Pear, New York Times, 2/22).

Details of President's Proposal

According to a White House official, Obama's proposal would create a seven-member rate board comprised of consumer, industry and medical representatives, as well as health economy experts.

The board -- called the Health Insurance Rate Authority -- would make broad determinations regarding whether proposed increases are reasonable and justifiable. In addition, HHS would work with state regulators while conducting annual reviews of the increases and would deny the rate hikes when they are classified as excessive (Shear/Balz, Washington Post, 2/22).

Under the proposal, the HHS secretary also could order insurers to change their increases or issue rebates to certain beneficiaries (New York Times, 2/22).

GOP Response

Kevin Smith, spokesperson for House Minority Leader John Boehner (R-Ohio), said the proposal "seems to be an admission from the Obama administration that their massive government takeover of health care will, despite their promises, increase health care premiums for millions of Americans" (Washington Post, 2/22).

According to the New York Times, although Republicans likely will oppose the proposal, observers note that the GOP must tailor its criticisms to avoid seeming to support large premium increases (New York Times, 2/22).

Jones Reintroduces Premium Regulation Bill

In related news, Assembly member Dave Jones (D-Sacramento) has announced plans to reintroduce a previously rejected bill (AB 2578) that would require state regulators to approve health insurance premium increases.

In addition, state Sen. Mark Leno (D-San Francisco) intends to introduce a bill requiring insurers to disclose their reasons for increasing rates and denying coverage to certain applicants (San Francisco Chronicle, 2/20).

Editorial

As a result of Anthem Blue Cross' "outrageous plan to increase rates," Jones might be able to pass his bill to increase the state's regulatory authority over health insurance rates, a San Jose Mercury News editorial states. It concludes, "Jones' AB 2578 deserves a fair hearing when the Assembly takes it up on Tuesday" (San Jose Mercury News, 2/19).