/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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Showing posts with label regulation. Show all posts
Showing posts with label regulation. Show all posts
Tuesday, October 13, 2009
Wednesday, September 30, 2009
Votes Against 'Public Option' Make Regulation of Health Insurance Premiums and Rates a Last Chance for Healthy, Competitive Market Under Reform,
Votes Against 'Public Option' Make Regulation of Health Insurance Premiums and Rates a Last Chance for Healthy, Competitive Market Under Reform, Says Consumer Watchdog
/PRNewswire/ -- The defeat of the so-called public insurance option in the Senate Finance Committee's version of health reform makes regulation of insurance premiums and copays even more critical, said Consumer Watchdog. If Americans are forced to buy private insurance policies under national health reform and nothing is done to regulate the prices of policies, consumers will remain trapped in a rising cost spiral enabled by insurers. Rate regulation is far from radical and is also good for the insurance industry, said the nonprofit, nonpartisan advocacy group.
The nation's toughest regulation of other types of insurance, including auto and homeowner policies, has produced a healthier, more competitive and even more profitable insurance market in California than in other states.
A 2008 study by Robert Hunter of the Consumer Federation of America found that since California passed highly effective regulation of property and casualty insurance in 1998, the state's dysfunctional insurance market has transformed. It is now the nation's fourth most competitive, fewer drivers are thrown into high-risk pools and insurers' average profits, at 10.6%, are well above the national average. Yet consumers also saved $61.8 billion dollars on their premiums over the same period and California insurance prices went from the second most expensive in the nation in 1989 to 20th in 2005 for auto liability premiums.
(see the study at http://www.consumerwatchdog.org/resources/state_auto_insurance_report.pdf)
Even medical malpractice insurance prices in California dropped sharply after the introduction of regulation, which appears far more effective in cost control than forbidding lawsuits against malpractice.
With health insurance rate regulation, insurers would have good reason to push for better, more effective and less wasteful health care, said Consumer Watchdog, just as auto insurers in California have backed tough auto and driver safety measures and home safety measures, as well as curbing fraud. Without regulation, insurers have no need to become more efficient.
"Mandatory insurance, as proposed in all the major bills in Congress, will turn government into a massive customer delivery system on behalf of a private industry," said Judy Dugan, research director of Consumer Watchdog. "Regulation is no more than a balancing force to this great benefit for insurance companies. For the Senate to brush off regulation as too much 'intervention' will leave millions of consumers dangling at the mercy of corporate sharks."
In a recent news report, former California Lieutenant Gov. and former Insurance Commissioner John Garamendi pinpointed the lack of cost controls without rate regulation. But Sen. Jeff Bingaman of New Mexico, a key figure in developing the Senate's proposals on health reform, said of regulation:
"That would be a very substantial additional intervention in the marketplace. I just don't think the support would be there for that kind of a change."
(see the L.A. Times story at http://www.latimes.com/news/nationworld/nation/la-na-healthcare-affordability2 -2009sep24,0,2139648,full.story )
Consumer Watchdog said rate regulation is a far lighter intervention than requiring everyone to purchase health insurance, and is a familiar presence in the U.S. marketplace.
"The mystery of today's debate is that tough rate regulation is not being seriously considered," said Dugan. "Forcing Americans to buy private insurance is radical, but rate regulation is the opposite of radical. It results in both lower rates and a healthier marketplace."
Here are some of the key points of the 2008 Consumer Federation study of Proposition 103, the 1998 voter initiative that regulates property and casualty insurance:
*An important adjunct to the regulatory framework established by Proposition 103 is its mechanism for public scrutiny and participation in the process of reviewing and approving rates. Proposition 103 grants consumers the right to challenge improper rates and practices before the Department of Insurance as well as the courts.
*A key factor in reducing insurer costs and consumer rates for automobile insurance is the strong financial incentives that the law provides consumers to drive more safely.
*California profits outpaced national insurer profits:
CALIFORNIA AND NATIONAL AUTO INSURER PROFITS
1989 - 2005 Return on Net Worth
(First figure is California returns, second figure is national returns)
Personal Auto Liability 12.9% 7.5%
Personal Auto Physical Damage 15.8% 16.3%
Personal Auto Total 13.5% 9.9%
Homeowners 7.4% -1.2%
All Property/Casualty Lines 13.9% 6.5%
-- California is first among all states in holding down insurance
premiums, with a 12.9 percent increase compared to an average national
increase of 50 percent;
-- California is the fourth most competitive auto insurance market in the
nation; Completely unregulated Illinois ranks 44th.
Other regulations under Proposition 103 that would benefit consumers directly, if applied to health insurance, include:
-- Requirement that insurers be transparent about how rates are
developed;
-- Prohibition on pass-through of excessive costs including unjustifiable
expenses, fines, and excessive executive salaries;
-- Standards that test the assumptions insurers make in setting rates.
It is worth recalling, in response to Sen. Bingaman, that insurance companies warned in 1988 that insurance regulation would be "massive government intervention" and would sharply raise insurance rates.
The result, notes Consumer Watchdog, was the opposite. And regulation was good for the industry as well.
-----
www.politicalpotluck.com
Political News You Can Use
/PRNewswire/ -- The defeat of the so-called public insurance option in the Senate Finance Committee's version of health reform makes regulation of insurance premiums and copays even more critical, said Consumer Watchdog. If Americans are forced to buy private insurance policies under national health reform and nothing is done to regulate the prices of policies, consumers will remain trapped in a rising cost spiral enabled by insurers. Rate regulation is far from radical and is also good for the insurance industry, said the nonprofit, nonpartisan advocacy group.
The nation's toughest regulation of other types of insurance, including auto and homeowner policies, has produced a healthier, more competitive and even more profitable insurance market in California than in other states.
A 2008 study by Robert Hunter of the Consumer Federation of America found that since California passed highly effective regulation of property and casualty insurance in 1998, the state's dysfunctional insurance market has transformed. It is now the nation's fourth most competitive, fewer drivers are thrown into high-risk pools and insurers' average profits, at 10.6%, are well above the national average. Yet consumers also saved $61.8 billion dollars on their premiums over the same period and California insurance prices went from the second most expensive in the nation in 1989 to 20th in 2005 for auto liability premiums.
(see the study at http://www.consumerwatchdog.org/resources/state_auto_insurance_report.pdf)
Even medical malpractice insurance prices in California dropped sharply after the introduction of regulation, which appears far more effective in cost control than forbidding lawsuits against malpractice.
With health insurance rate regulation, insurers would have good reason to push for better, more effective and less wasteful health care, said Consumer Watchdog, just as auto insurers in California have backed tough auto and driver safety measures and home safety measures, as well as curbing fraud. Without regulation, insurers have no need to become more efficient.
"Mandatory insurance, as proposed in all the major bills in Congress, will turn government into a massive customer delivery system on behalf of a private industry," said Judy Dugan, research director of Consumer Watchdog. "Regulation is no more than a balancing force to this great benefit for insurance companies. For the Senate to brush off regulation as too much 'intervention' will leave millions of consumers dangling at the mercy of corporate sharks."
In a recent news report, former California Lieutenant Gov. and former Insurance Commissioner John Garamendi pinpointed the lack of cost controls without rate regulation. But Sen. Jeff Bingaman of New Mexico, a key figure in developing the Senate's proposals on health reform, said of regulation:
"That would be a very substantial additional intervention in the marketplace. I just don't think the support would be there for that kind of a change."
(see the L.A. Times story at http://www.latimes.com/news/nationworld/nation/la-na-healthcare-affordability2 -2009sep24,0,2139648,full.story )
Consumer Watchdog said rate regulation is a far lighter intervention than requiring everyone to purchase health insurance, and is a familiar presence in the U.S. marketplace.
"The mystery of today's debate is that tough rate regulation is not being seriously considered," said Dugan. "Forcing Americans to buy private insurance is radical, but rate regulation is the opposite of radical. It results in both lower rates and a healthier marketplace."
Here are some of the key points of the 2008 Consumer Federation study of Proposition 103, the 1998 voter initiative that regulates property and casualty insurance:
*An important adjunct to the regulatory framework established by Proposition 103 is its mechanism for public scrutiny and participation in the process of reviewing and approving rates. Proposition 103 grants consumers the right to challenge improper rates and practices before the Department of Insurance as well as the courts.
*A key factor in reducing insurer costs and consumer rates for automobile insurance is the strong financial incentives that the law provides consumers to drive more safely.
*California profits outpaced national insurer profits:
CALIFORNIA AND NATIONAL AUTO INSURER PROFITS
1989 - 2005 Return on Net Worth
(First figure is California returns, second figure is national returns)
Personal Auto Liability 12.9% 7.5%
Personal Auto Physical Damage 15.8% 16.3%
Personal Auto Total 13.5% 9.9%
Homeowners 7.4% -1.2%
All Property/Casualty Lines 13.9% 6.5%
-- California is first among all states in holding down insurance
premiums, with a 12.9 percent increase compared to an average national
increase of 50 percent;
-- California is the fourth most competitive auto insurance market in the
nation; Completely unregulated Illinois ranks 44th.
Other regulations under Proposition 103 that would benefit consumers directly, if applied to health insurance, include:
-- Requirement that insurers be transparent about how rates are
developed;
-- Prohibition on pass-through of excessive costs including unjustifiable
expenses, fines, and excessive executive salaries;
-- Standards that test the assumptions insurers make in setting rates.
It is worth recalling, in response to Sen. Bingaman, that insurance companies warned in 1988 that insurance regulation would be "massive government intervention" and would sharply raise insurance rates.
The result, notes Consumer Watchdog, was the opposite. And regulation was good for the industry as well.
-----
www.politicalpotluck.com
Political News You Can Use
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