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Obama Proposes Federal Oversight of Health Insurance Rate Hikes

Source: NY Times


Posted on 22 Feb 2010

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President Obama will propose today giving the federal government new power to block excessive rate increases by health insurance companies, as he rolls out comprehensive legislation to revamp the nation's health care system, White House officials said.

The president's legislation aims to bridge differences between the bills adopted by the House and Senate late last year, and to frame his debate with Republicans over health policy at a televised "summit" meeting on Thursday.

By focusing on the effort to tighten regulation of insurance costs as a new element that had not been included in either the House or Senate bills, Mr. Obama is seizing on outrage over recent premium increases of up to 39 percent announced by Anthem Blue Cross of California, and moving to portray the Democrats’ health overhaul as protecting Americans from predatory insurers.

Congressional Republicans have long decried the Democrats’ legislation as a “government takeover” of health care. And while they will likely resist any expansion of federal authority over existing state regulators, they will also face a tough balancing act at Thursday’s summit meeting to avoid appearing as if they are willing to allow steep premium hikes like those by Anthem.

Republican leaders had not formally accepted the president’s invitation to a summit meeting on Thursday. But the Senate Republican leader, Mitch McConnell of Kentucky, said on Sunday on Fox News that he would attend. “I intend to be there and my members will be there and ready to participate,” he said.

And the president’s new provision seemed to offer Republicans an opening for a new line of criticism – that Mr. Obama Democrats are anticipating the possibility of hefty price increases for health insurance even after their big legislation is adopted.

The White House has held details of Mr. Obama’s bill extremely tight, leaving even top Democrats in Congress anxiously awaiting the text to be released Monday.

The president’s bill would grant the federal health and human services secretary new authority to review, and to block, premium increases by private insurers, and it would create a new Health Insurance Rate Authority, comprised of health industry experts that would issue an annual report setting the parameters for reasonable rate increases based on conditions in the market.

The legislation would call on the secretary of health and human services to work with state regulators to develop an annual review of rate increases, and if increases are deemed “unjustified” the secretary or the state could block the increase, order the insurer to change it, or even issue a rebate to beneficiaries. States would be eligible for a portion of $250 million in grants to finance premium review and approval.

The new rate board would be composed of seven members, including consumer representatives, an insurance industry representative, a physician, and other experts such health economists and actuaries, the White House said. The board’s annual report would offer guidance to the public and states on whether rate increases should be approved.

But it is unclear if the new powers or the rate board would have much long-term impact. The Democrats’ legislation ultimately seeks to sharply curtail the existing individual insurance market in which companies like Anthem Blue Cross now sell their policies.

Instead, such policies would be heavily regulated by the federal government and sold through new insurance exchanges, where consumers could compare prices and benefits packages and choose policies that best first their needs.

The president’s bill, like the measures adopted by the House and Senate, is expected to require most Americans to obtain insurance, and would provide new federal subsidies to help moderate-income people afford to buy private coverage.


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