HEALTH INSURANCE: HIAA Condemns Proposed Premium Cap
The Health Insurance Association of America yesterday "attacked" Sen. Edward Kennedy's (D-MA) proposal to cap insurance premiums under the 1996 Health Insurance Portability and Accountability Act. CongressDaily reports that the association released an analysis showing that Kennedy's attempt "to cap premiums at 150% of a standard rate for people seeking guaranteed individual coverage" under HIPAA would "raise costs and end coverage for about 160,000 people." HIAA President Bill Gradison said "Kennedy's plan would raise the average cost of premiums by 10.9%, or $120 annually, and likely lead to a 2.8% overall decrease in the numbers of those buying individual coverage" (4/9). Roughly 5.5 million Americans would face increased premiums, based upon the association's study of individual coverage in 19 states with guaranteed HIPAA eligibility (HIAA release, 4/10).
Where It All Started
Yesterday's attack is the "latest volley in the industry's battle with members of Congress over high premiums stemming from the" HIPAA, the AP/Contra Costa Times reports. In early March, General Accounting Office report found that the insurance industry "began charging extremely high premiums -- as much as $15,000 above normal rates in some cases," in response to the HIPAA's mandate that individuals be allowed to purchase coverage when they lose employer-based coverage. The HIAA justified the increases, saying that "mostly sick people" take advantage of the mandate, while "[h]ealthy people can afford to buy new policies on the regular market" (Robinson, 4/10).
Maybe Not So
HIAA spokesperson Richard Coorsh said, "Individual policyholders would be targeted because companies couldn't afford to raise rates in the highly competitive market for group policies." However, Kennedy "dismissed" the association's study, citing "a study by the American Academy of Actuaries that said his bill would raise premiums by no more than 4.8% over three years." He said, "Unscrupulous insurance companies are undercutting the 1996 reforms by unfair price-gouging" (AP/Times, 4/10).