Health Insurers Push Last-Minute Loopholes to Gut Rules Requiring Premiums Be Spent on Health Care, Not Overhead -- Watchdogs Ask President for Rate Freeze

/PRNewswire -- As the insurance industry lobbies state insurance commissioners in Orlando to weaken modest regulations on health insurance premiums, Consumer Watchdog's leaders reiterated their call for President Obama to place a moratorium on premium increases, articulated this week in a Los Angeles Times op-ed.

"Health insurance companies have declared war on President Obama's healthcare plan," argues Consumer Watchdog President Jamie Court, author of "The Progressive's Guide To Raising Hell." "The struggling middle class cannot afford more double-digit premium hikes, and federal law says we are owed an explanation before having to pay them. Obama should forbid premium hikes until the companies comply with pricing provisions of the new federal law."

Read the Los Angeles Times op-ed calling for an executive order freezing rates: http://www.consumerwatchdog.org/patients/articles/?storyId=36580

On Thursday, the National Association of Insurance Commissioners is expected to take a final vote on new health reform rules requiring insurers to spend at least 80-85% of consumers' premiums on health care. State regulators continue to discuss how much information health insurance companies must disclose about unreasonable premium increases.

The insurance industry is pushing a series of last-minute amendments at the meeting of the National Association of Insurance Commissioners this week that would weaken regulation under the health reform law, including measures that would allow them to:

- Maintain low spending on health care in some states if they spend a higher percentage in other states. This "aggregation" of medical spending across states will nullify the new medical spending rules for the very consumers they are meant to help - those whose insurance plans spend too much on administration and profits.

- Artificially boost the amount that insurers report spending on medical care. "Credibility" adjustments are meant to account for fluctuations in health care spending for plans with fewer customers by increasing the reported medical loss ratio. Insurance companies' proposal could allow insurers to get away with intentionally low medical spending, said Consumer Watchdog.

- Falsely identify administrative costs – including broker commissions, fraud prevention, claims handling and denials – as medical spending.

Public scrutiny of unreasonable premiums is the health reform law's only check on rate increases. However, because regulations are still being written, insurance companies are not currently justifying unreasonable increases. President Obama has the obligation to issue an Executive Order freezing premiums until insurers begin complying with the law, said Consumer Watchdog.

"Insurance commissioners have a choice. Send the current modest version of medical spending regulations to HHS, or give insurers free rein to continue spending too much money on bloated profits and paper-pushers and not enough on actual health care," said Carmen Balber, Washington DC director for Consumer Watchdog. "In the meantime, insurers rush to raise premiums now just in case they have to rein in spending tomorrow. President Obama has the power to protect consumers from arbitrary price hikes by freezing premiums until insurers explain how they're spent in the full light of day."

Insurance companies have lobbied to limit the information made public in the rate justification considered by state regulators today. Consumer Watchdog argued for more disclosure to explain how insurers spend customer premiums, including:

- Lobbying expenditures and campaign contributions;

- Advertising and marketing expenditures; and

- Transactions and transfers of funds to affiliates.