Consumer Watchdog: White House Should Respond to Health Insurer Scare Tactics by Supporting 'Prior Approval' Rate Regulation

/PRNewswire/ -- The White House and Congress should embrace "prior approval" regulation of health care rates in response to the health insurance industry's threat that costs will increase under a reform plan being considered by the U.S. Senate Finance Committee today.

Consumer Watchdog, which pioneered the most successful insurance premium regulation law in the nation, said that strong "prior approval" regulation should be extended to health insurers in every state. Such regulation has saved drivers in California $62 billion on auto insurance rates since 1988 under Proposition 103, and similar savings would be expected for health insurance rates.

"There is a simple response to the insurance industry's threat to raise our health care premiums: require insurance companies to justify those increases and allow consumers to intervene to block excessive charges," said Jerry Flanagan, health policy director of Consumer Watchdog. "California's 'prior approval' rate regulation is the nation's most successful insurance regulation in the nation and a successful model to restrain rampant insurance company profiteering and waste."

Since 2003, Consumer Watchdog has saved $1.7 billion by challenging unnecessary premium increase and insufficient decrease requests using the public intervention process.

A 2008 Consumer Federation of America report detailing the savings of Proposition 103 can be downloaded at: http://www.consumerfed.org/pdfs/state_auto_insurance_report.pdf. A related press release is available at: http://www.consumerwatchdog.org/insurance/articles/?storyId=19888.

21 states have some form of "prior approval" regulation for health insurance rates, but none are as effective as California's Proposition 103 which applies to property and casualty insurance. The key components of California's landmark Proposition 103 are:

** A prior approval system for rates requiring insurers to seek permission from government regulators and justify rate increases. Since 1988, California's Proposition 103 has saved drivers $62 billion while fostering a competitive and still profitable insurance market.

** An intervenor system that allows the public to challenge unnecessary premium hikes. Since 2003, Consumer Watchdog has saved $1.7 billion by challenging unnecessary premium increase and insufficient decrease requests using the public intervention process.

** An elected state-level commissioner accountable to the public directly for premium hikes. To ensure that the reforms would be properly enforced, Proposition 103 made the state insurance commissioner an elected position accountable directly to the voters, not a political appointee.

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