KASSEBAUM-KENNEDY: Health Insurers Defend High Prices
The health insurance industry yesterday "struck back" at a General Accounting Office report charging the industry has skirted the law in implementing the 1996 Health Insurance Portability and Accountability Act, CongressDaily reports (Rovner, 3/19). Democrats and Republicans were "united" in 1996 when they passed the Kassebaum-Kennedy law guaranteeing Americans would not lost health coverage when they switched jobs, the AP/Los Angeles Times reports, and "[t]hey are united now in slamming insurance companies they say are undermining the law's effectiveness" (Meckler, 3/20). "Democrats threatened legislation to limit what insurers could charge, while Republicans called for better enforcement of the law," the Philadelphia Inquirer reports (Zaldivar, 3/20).
At the Senate Labor and Resources Committee hearing yesterday, the AP/Baltimore Sun reports that lawmakers were "furious" about the GAO report which said some insurance companies were charging 140% to 600% of standard premiums to customers switching from group policies to individual coverage. "I am outraged at the mockery that some insurance companies in some states are making of the law," said Rep. Nancy Johnson (R-CT). "With rates of that magnitude, I'm not sure you can still call it insurance," said committee chair Jim Jeffords (R-VT). Sen. Chris Dodd (D-CT) told the insurance companies in his state that "they had better fix the problem on their own or legislation 'will sweep through the Congress'" (3/20). And Sen. Edward Kennedy (D-MA), sponsor of the original legislation, said "he will introduce legislation ... that would restrict premiums to no more that 150% of the standard rate," CongressDaily reports (3/19).
Below The Belt
Testifying for the insurance industry, Health Insurance Association of American President Bill Gradison said the GAO report was misleading because it focused only on four states. "[T]he recent GAO report leaves readers thinking that the problem of extremely high rates is the norm. This is not the case," said Gradison. "It is only in the states that have not explicitly provided for broad risk-spreading that consumers are encountering high rates," he said (HIAA release, 3/19). CongressDaily reports that "Gradison noted in his testimony [that] 33 states have spread risks successfully -- and kept premiums down" (3/19).
Told You So
Gradison maintained that "Clinton and Congress were well aware that premiums would be high if they forced insurance companies to write policies for people who are already sick and certain to need expensive treatment," the AP/Sun reports. He said, "This is not an issue of overcharging," because "nearly everyone taking advantage of the law is sick." The AP/Sun reports that Gradison said healthy customers, "who don't need the law's projections in the first place, simply buy insurance for less on the regular market" (3/20). A release issued at the hearing by the Council for Affordable Health Insurance "was blunter still," according to CongressDaily (3/19). "Several vague and unsubstantiated charges are made against insurers, such as outrageous pricing and manipulative marketing practices applied to those who are eligible for guaranteed issue of insurance in the individual market," said CAHI President David Lack (release, 3/19).