Nation's Frontline Physicians Unhappy with Health Care Reform Measures

/PRNewswire/ -- The Physicians Foundation today released the results of a national survey of physicians that finds strong negative feelings towards the new health care reform law and fear that patient care will suffer in the months and years ahead. The survey was intended to gauge physicians' initial reaction to the passage of health reform and to learn the ways in which they plan to respond to it.

The research, conducted by Merritt Hawkins, a national physician search and consulting firm, on behalf of the Foundation, comes on the two-year anniversary of the Foundation's first national physician survey (available at www.physiciansfoundation.org) that found growing dissatisfaction among doctors as they struggle with less time for patient care and increased time dealing with non-clinical paperwork, difficulty receiving reimbursement and burdensome government regulations. The new research reinforces those findings and shows that the new health care reform could intensify existing problems for doctors and worsen the shortage of primary care doctors, making it more difficult for patients to access quality care.

"Physicians support reform; in fact, we were the ones leading the fight against the status quo. But this new research shows that doctors strongly believe the law is not working like it needs to – for them, or for their patients," said Lou Goodman, PhD, President. "For any health care reform effort to be successful, it must include the viewpoint of our nation's doctors. Their perspective from the front-lines of patient care is critical in determining what's broken in our system and how we can fix it."

Notably, physicians also felt that Medicare's Sustainable Growth Rate formula (SGR) had an equally large impact on their practices as health care reform. Proposed cuts have been repeatedly put off by Congress and in January will reach approximately 30% if not addressed.

"Despite the high profile nature of the health reform discussion, physicians are equally concerned over the impact of SGR on their practices," said Walker Ray, MD, Research Committee Chair. "The fact that SGR was not addressed as part of this year's reform effort shows that we don't have a comprehensive solution yet, and also that doctors simply didn't have a voice at the table during the reform debate. That needs to change."

Key research findings include:

* The majority of physicians (60%) said health reform will compel them to close or significantly restrict their practices to certain categories of patients. Of these, 93% said they will be forced to close or significantly restrict their practices to Medicaid patients, while 87% said they would be forced to close or significantly restrict their practices to Medicare patients.
* 40% of physicians said they would drop out of patient care in the next one to three years, either by retiring, seeking a non-clinical job within healthcare, or by seeking a non-healthcare related job.
* The majority of physicians (59%) said health reform will cause them to spend less time with patients.
* While over half of physicians said health reform will cause patient volumes in their practices to increase, 69% said they no longer have the time or resources to see additional patients in their practices while still maintaining quality of care.
* 67% of physicians said their initial reaction to passage of the 2010 Patient Protection and Affordable Care Act was either "somewhat negative" or "very negative" and a great majority (86%) believes the viewpoint of physicians was not adequately represented to policy makers during the run-up to passage of the law.
* Physicians are almost evenly divided over the relative importance of SGR (36%) and health reform (34%) to their practices, while 30% are unsure which will have the greatest impact.

Consumer Watchdog Warns White House Strong Early Health Reform Rules are Needed to Prove Value of Law to Public

/PRNewswire/ -- Consumer Watchdog today warned the White House that the insurance industry is still intent on demolishing modest consumer protections in the health reform law, and outlined the most damaging industry demands in a letter to HHS Secretary Kathleen Sebelius. The letter, noting that the chief industry lobbying group is hiring lobbyists with direct HHS and Justice Department ties, urges Sebelius not to accept any weakening and to repair some of the damage already done by industry pressure.

Read the letter, with data links, at http://www.consumerwatchdog.org/resources/SebeliusMLR1110.pdf

"The midterm elections are not a signal to water down reform until consumers can't see any benefit," said Carmen Balber, Washington director of the nonprofit, nonpartisan Consumer Watchdog. "The White House has to prove to doubting voters that it can protect them from having to choose between paying the mortgage and keeping their health insurance."

"Consumers' unhappiness with the health reform law stems directly from their belief that they won't personally benefit from it as they watch premiums soar," said Balber. "You can help most Americans see the benefit by enacting strong protections in these consumer regulations."

The letter said:

"As you know, the health reform law did nothing to cap runaway rate hikes. However, two provisions of the law meant to at least curb the premiums consumers pay are now in your court: rules to require insurance companies to spend more on actual health care and less on administration and profit, and rules to define and require insurance companies to justify 'unreasonable' premiums before they take effect. The insurance industry, in the wake of the midterm election, is refocusing its efforts against these provisions on your agency.

"The insurers have threatened to disrupt insurance markets if health reform regulations are not to their liking. We urge you to reject such intimidation.

"You must instead strengthen new rules intended to shine a spotlight on insurer spending and make the insurance industry more efficient in providing health care. This must include a strong definition of what constitutes an 'unreasonable' rate increase, given the unaffordable double-digit premium increases that insurers are now imposing on existing customers. Your definition will govern whether insurers have to publicly defend their rate increases, and should be as simple and inclusive as possible to ensure that any questionable increase receives additional review."

The letter also warned that insurers have key additional demands that would, if accepted, make meaningless the law's demand that insurers spend a higher proportion of premium revenue on health care:

"[The industry's] chief and most damaging additional demands are, in brief:

"1. To combine each plan of a single insurer at the national level. …. Combining them nationally for purposes of the medical loss ratio would allow insurers to gouge customers in high-profit states by offsetting areas of low medical spending with higher proportions in better-regulated states.

"2. To deduct insurance broker fees from premiums before measuring MLR. …. If the deduction is allowed, the MLR minimum of 80% in those markets will become meaningless.

"3. To give many plans a larger percentage 'bonus' in calculating whether they have met the 80% individual/small business minimum and the 85% group plan minimum for health care spending."

In addition, said the letter, HHS must tighten the NAIC's too-loose definitions of what can be counted as insurer health care, particularly: corporate image marketing campaigns wrapped in a public health care message; deduction of virtually all federal and state taxes from premium income before the health care percentage is calculated; and failure to make public the insurers' defense of what they are counting as health care.

Ultimately, said the letter,

"Consumers cannot expect to pay a fair price for health insurance until all insurance companies are required to justify, and get approval for, every premium change, and until the public is allowed to fully participate in the rate review process. We urge you to encourage the states to enact and enhance prior approval rate regulation and consumer participation. Strong rules on medical spending and premium review are nevertheless your strongest currently available tools to protect consumers from insurer profiteering and greed."

Consumer Watchdog is a nonpartisan consumer advocacy organization with offices in Washington, D.C. and Santa Monica, CA. Find us on the web at: http://www.ConsumerWatchdog.org

New Study Finds Defensive Medicine Costs $45 Billion Nationally

/PRNewswire/ -- Lisa Maas, executive director of Californians Allied for Patient Protection (CAPP), issued the following statement in response to a recent study published in the 2010 issue of Health Affairs which found that costs related to medical liability account for more than $55 billion a year or 2.4% of the total costs to the U.S. healthcare system. According to the study, approximately 80%, or $45 billion of these costs are the result of defensive medicine, procedures performed to avoid unnecessary litigation.

CAPP is a coalition of physicians, hospitals, community clinics, local governments, dentists, nurses and other groups supporting California's Medical Injury Compensation Reform Act (MICRA) law which allows reasonable reforms on medical liability lawsuits to protect access to healthcare. MICRA provides injured patients unlimited compensation for economic damages (lost wages, medical costs), unlimited punitive damages, but limits non-economic damages (pain and suffering) to $250,000.

"Common sense dictates that if healthcare practitioners are looking over their shoulders and constantly worried about getting sued, they will take action to cover themselves. These actions have societal costs and this recent study found that the costs impact us by more than $45 billion per year.

"Meritless lawsuits do not result in better care, just more dollars spent on defensive medicine, unnecessary tests and litigation costs that drive up the cost of healthcare for everyone.

"The study demonstrates that if national medical liability tort reform were implemented to limit meritless lawsuits, it could produce a national healthcare savings of tens of billions of dollars. That is a significant savings. It would free up these funds to care for the uninsured, make insurance more affordable, or provide new dollars for more research.

"If President Obama and those working to implement national healthcare reform are serious about 'bending the cost curve down,' then national medical liability tort reform, similar to California's MICRA, would achieve significant savings nationally. The purpose behind the recent federal reform legislation was to reduce the cost of healthcare and make it more affordable for all Americans. Real medical liability reform complements this goal and will generate tangible savings quickly without negatively impacting care. We hope this study will spur Congress to adopt these evidence-based reforms in its next session."

Congress Has Allowed Most Previous Medicare Cuts to Take Effect, New Study Shows

/PRNewswire/ -- Despite claims that the pending health reform bills aren't really paid for because Congress never lets Medicare savings take effect, Congress has allowed the vast majority of Medicare cuts that it enacted in the past two decades to take effect and produce significant savings, a new study from the Center on Budget and Policy Priorities shows.

The analysis, by James Horney and Paul Van de Water, former senior CBO officials now at the Center, examines the history of every significant Medicare cut that Congress has enacted in the past 20 years - specifically, cuts included in deficit reduction legislation enacted in 1990, 1993, 1997, and 2005.

The authors found that virtually 100 percent of the 1990 savings survived; virtually 100 percent of the 1993 savings survived; virtually 100 percent of the 2005 savings survived; and nearly 80 percent of the 1997 savings survived.

"Today's conventional wisdom is wrong," said Horney. "Medicare savings have been a big part of all major deficit-reduction packages that Congress has enacted since 1990, and lawmakers have allowed the vast majority of those cuts to take effect. Given that history, there is every reason to believe that Congress will allow the Medicare savings in the pending bills to take effect as well."

Main "Example" of Failure to Implement Cuts Rests on Misunderstanding

In arguing that large Medicare cuts never "stick," many critics focus on Congress' repeated refusal to let the reductions in doctor reimbursement rates under Medicare's "Sustainable Growth Rate" (SGR) mechanism to take full effect.

But, as the report explains, Congress didn't intend the SGR to produce large savings. In fact, the SGR represented only 3 percent of the total ten-year Medicare savings in the 1997 deficit-reduction bill - only $12 billion of the $394 billion in total Medicare savings over ten years, as CBO estimated at the time.

Because it was badly designed, however, the SGR would actually have cut payments to physicians much more than had been anticipated and well below the level needed to keep pace with doctors' costs. Congress' decision to forestall these unintended cuts was therefore justified on policy grounds.

But, Congress did not simply cancel the SGR and let physician reimbursement rates grow willy-nilly. In fact, although Congress has since 2002 prevented the full SGR cuts from going into effect, it has cut physician reimbursement rates substantially below what was needed simply to keep pace with inflation. Even if Congress blocks the next scheduled SGR cut and freezes the rate at current levels, the rate next year will be 17 percent below the rate in effect in 2001, adjusted for medical inflation.

The Medicare savings provisions in the House and Senate health bills are very different from the poorly designed SGR cut. Instead, they are similar in both size and design to the past Medicare cuts that Congress has allowed to take effect.

Bills Contain Wide Range of Cost-Containment Measures

Claims that the House and Senate health reform bills lack serious cost-containment provisions also do not withstand close scrutiny, the report explains.

"These bills contain just about every reform that health policy experts have proposed to slow health care costs over time," notes Van de Water. "While we will ultimately have to do much more, the bills take most of the steps that we know enough about to pursue now in the areas that experts view as promising."

In Medicare, the bills would scale back overpayments to private insurers, reduce annual payment updates for hospitals and other providers, and, in the House bill, lower prescription drug costs. To reduce costs across the entire health care system, the bills would promote competition among insurers by creating an insurance exchange, cut insurers' administrative costs, invest in preventive care, penalize hospitals with high readmission rates, and establish pilot projects in various areas to help determine the best approaches to controlling health care costs (while giving federal health officials some new authority to implement some changes in Medicare based on the knowledge gained without having to enact new legislation). In addition, the Senate bill would impose an excise tax on high-cost insurance plans to discourage overuse of health care and would create an independent board with the power to implement cost savings in Medicare.

"Lawmakers can strengthen the final bill by combining the strongest cost-control elements of the House and Senate bills," Van de Water said.

Bills Are Fully Paid For and Would Begin to Rein in Long-Term Health Costs

A third major claim by critics -- that, in the near term, the House and Senate bills would raise the nation's total health care expenditures -- is correct but not a meaningful argument against health reform, the report explains. Covering tens of millions of uninsured Americans will necessarily raise total health care spending in the short term.

"There are two fundamental tests for any health reform bill: does it expand coverage without increasing the deficit, and does it begin to slow health cost growth so total health spending will be lower over the long term than it otherwise would be? The House and Senate bills meet the first test and hold real promise for the second," Horney said.

The Congressional Budget Office estimates that both bills would reduce deficits over the first ten years (the House bill by $138 billion, the Senate bill by $130 billion) and for at least a decade after that. Moreover, under the Senate bill, the total federal cost for all health care spending and tax subsidies in the decade after 2019 would be no higher than if we continued current law, according to CBO. This is a major accomplishment for a bill that extends coverage to more than 30 million of the uninsured, the report notes.

Finally, some critics complain that the CBO cost estimates showing that the bills would reduce the deficit are misleading and rest upon a gimmick -- specifically, that neither the House nor the Senate bill includes a measure to permanently eliminate the SGR mechanism. Since Congress likely will continue to prevent the SGR from taking effect, critics say, Congress and CBO should consider the cost of such action as part of the cost of the health reform bills. Once that cost is added, they argue, the contention that the bills do not increase the deficit is false.

Indeed, Congress likely will never let the full SGR cuts take effect, and it probably won't offset the cost of scrapping them. But that cost is neither part of, nor in any way a result of, health care reform -- the federal government will incur this cost regardless of health care reform, not because of it. This fact is undeniable: if health reform legislation were to die tomorrow, the full SGR cost would remain. To be sure, it would be better if Congress offset the cost of cancelling the SGR cuts. But that issue is separate from the question of whether the health care reform bills themselves add to the deficit or not.

The full report is available at http://www.cbpp.org/cms/index.cfm?fa=view&id=3021.

The Center on Budget and Policy Priorities is a nonprofit, nonpartisan research organization and policy institute that conducts research and analysis on a range of government policies and programs. It is supported primarily by foundation grants.

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Health Insurance Reform Proposals Are a Bargain Not a Bust for Georgia

Leading health insurance reform proposals to expand Medicaid that are making their way through Congress not only could cover one million low-income Georgians, but will provide more than 90 percent of the funds to do so.

This is a win-win for all Georgians, as explained in the Georgia Budget & Policy Institute's latest analysis. Both Governor Perdue and Lt. Governor Cagle's have overstated the budget impact and neglected to state that the federal government is not only picking up most of Georgia's tab, but that local economies will benefit from the healthcare dollars as well as healthier citizens.

The governor and lieutenant governor are both using out-of-date cost estimates when stating that Georgia cannot afford the reform proposals to expand Medicaid. In addition, both fail to apply these basic principles to their analysis:

1) Participation will ramp up over a few years and cannot practically happen the first day the expansion takes effect.
2) Full participation in the expanded Medicaid program may never occur.
3) Federal dollars will pay the full cost for two to three years, and then 90 percent of it after that.

"There is plenty of time to ensure the state has adequate funds to provide coverage to the lowest-income Georgians without access to health insurance, since neither proposal starts for a few years," said Timothy Sweeney, the Institute's senior healthcare analyst, "and even when the law does go into effect, those eligible will sign-up over another several years, not all at once.

"Another reason that expanding Medicaid is a bargain not just for Georgia, but for all the states, is that in addition to getting its citizens covered, it injects millions of federal funds into local economies," said Sweeney, the report's author.

Georgian's needs are growing dramatically and the state's ability to meet them are shrinking. Georgia's uninsured rate is tenth in the nation. Roughly one in seven people lived in poverty in 2008, and our job loss rate is fifth in the nation. Vulnerable groups are hit hardest during recessions, and low-income workers are losing employer-sponsored health insurance faster than others.

The analysis also explains why both houses of Congress are choosing to expand Medicaid, and how each bill funds the expansion with federal funds.

The Georgia Department of Community Health is currently reworking their cost estimates based on current reform proposals that have been passed in Congress. "The state's highest leaders should use accurate numbers and not scare people into believing the state cannot afford to expand coverage to those with the least access to healthcare," said Alan Essig, the Institue's executive director.

"In fact they have it backwards, the state cannot afford not to take advantage of this incredible opportunity to insure its neediest citizens."

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Alternate Health Care Plan by the GOP

The Republican Plan for Reforming Health Care--

Here is the full text of the proposal:
http://rules-republicans.house.gov/Media/PDF/RepublicanAlternative3962_9.pdf

Consumer Watchdog Names 'Top 5 Time Bombs' in Senate Health Plan

/PRNewswire/ -- The leading health reform proposal in the Senate contains numerous industry-demanded "time bombs" that will harm consumers in years to come, Consumer Watchdog said today. The measure, from the Senate Finance Committee, was heavily lobbied by insurance and pharmaceutical companies and large employers.

Consumer Watchdog said the proposal's top 5 health time bombs are:

-- Elimination of a public health insurance option;
-- Evasion of state patient-rights laws;
-- Weak "employer mandate;"
-- Omission of price regulation of insurance;
-- Lack of recourse to hold insurers accountable.

"If this bill becomes law, consumers will find themselves still at the absolute mercy of private insurance companies," said Judy Dugan, research director of Consumer Watchdog. "Premiums and co-pays will be uncontrolled, even as patient rights are eliminated. Congress must stand up to the corporate lobbies and add better consumer protections, or pay the price in voter anger at being stuck with a bait-and-switch reform."

Here are details on the Top 5 "Health Reform Time Bombs" in the Senate Finance Committee bill:

1. No public option. Stopping a public option is the No. 1 demand of the insurance lobby. So despite public support at 65 percent for a public option, and even higher support among doctors, there is no effective competitor to private insurance companies in the bill. The bill's alternative --voluntary purchasing cooperatives formed by consumers -- was dismissed as ineffective even by the Congressional Budget office.

The budget office's financial report on the bill said of such co-ops:

"[A]s they are described in the specifications, they seem unlikely to establish a significant market presence in many areas of the country...." Yet the CBO report says the attempt to establish such destined-to-fail cooperatives would cost taxpayers $3 billion.

However, the bill does include a framework for states to do better, offering to waive certain rules to allow stronger experimentation, even single payer health care systems, by vote of a state's citizens. States, under such a waiver plan, should be able to combine existing federal funding into a single pot to fund the larger-scale reforms. This state option must be strengthened in the final bill, with or without a national public option, said Consumer Watchdog. The Senate Finance bill should also be clarified to grant states automatic Medicare, Medicaid and ERISA waivers that are necessary to implement state single payer and state public option programs.

2. State regulations preempted. Currently, many states including New York, California and Massachusetts have robust requirements for what insurance must cover, including decent maternity care, hospital care for surgical patients, cancer treatment and chronic disease care. The Senate bill circumvents these patient rights by:

a. Allowing insurers to forming "interstate compacts" to sell across state lines, while being subject only to the laws of the state in which the insurance policy is "written or issued." Insurers would certainly choose to be regulated by the weakest state.

b. Allowing insurers to sell so-called national plans in every state unless a state's legislature opts out. The bill says explicitly that such plans would "preempt state benefit mandates" and be governed only by new and undefined federal guidelines that are certain to be weaker than many states'.

The national policies would also degrade many employer-offered health plans. Patients would likely be unaware that their insurance was riddled with holes until they needed to use it, and would have no local enforcer to turn to. The cheaper premiums offered by such plans would be achieved by degrading coverage, raising patient costs and depriving consumers of state enforcement.

Both concepts are similar to a failed 2006 bill by Sen. Mike Enzi (R-Wyo.), who was a key figure in writing the new Senate bill. The unregulated policies are now being championed by Sen. Olympia Snowe, a critical swing Senate vote.

See a news analysis of Enzi's previous measure at: http://www.consumerwatchdog.org/patients/articles/?storyId=17325

3. No employer mandate. Employers, even large employers, would not be required to offer any health insurance. The only penalty would be a small fee to cover any government subsidies provided to lower-wage workers. The fee is capped at a maximum of $400 a year per employee, and only for companies with more than 50 employees. The amount is a fraction of employers' share of actual insurance coverage.

This would encourage companies to drop employee coverage and pay the fee instead -- saving the employers millions, because the low cap would cost taxpayers billions, even if employers slightly raise salaries to compensate for the lack of insurance.

Other bills, particularly the House version of health reform, have more realistic employer penalties for failing to cover employees based on a percentage of payroll. But business groups will demand the ineffectively small penalty in the final bill, unless the president and Congressional leaders stand firm.

4. Health premiums unregulated. With no public option to provide competition and no direct regulation of private insurance rates in the Senate bill, insurers will be free to charge what they choose. Health insurance premiums have risen 131 percent over the last decade, according to the Kaiser Family Foundation -- far above general inflation, wages and even overall medical inflation. The premium increases do not include rising deductibles and co-pays. See more on the Kaiser survey at http://www.kff.org/insurance/ehbs091509nr.cfm

The only effective curb on this price spiral is direct regulation of premiums and rates, which would be most effective if carried out by the states.

California's 20-year-old law governing property and casualty insurance, including mandatory auto insurance, provides the best model. Insurers have to seek permission through an elected insurance commissioner prior to raising premiums. Members of the public can challenge unnecessary premium hikes, similar to systems in place in many public utility commissions, providing an effective check against any government collusion with insurance companies.

The Consumer Federation of America reported in 2008 that the regulation had saved Californians $61.8 billion on their auto insurance alone. That doesn't mean auto insurers aren't prospering. California is America's fourth most competitive insurance market, while completely unregulated Illinois, home of Allstate, ranks 44th. Fewer California drivers are thrown into the high-risk pool and insurers' average profit of 13.9 percent in the state from 1989 to 2005 is double the national level of 6.5 percent. The law regulated all major lines of insurance, except for health and workers compensation, which are the only two consistently dysfunctional insurance markets in California.

See the Consumer Federation study at http://www.consumerwatchdog.org/insurance/articles/?storyId=19888

Congress and the president must not just encourage state regulation of health insurance rates, but set a floor for such regulation. Otherwise, government is no more than a customer delivery system for private insurance companies.

5. No insurer accountability. A recently dismissed California case involving the death of a teenager after her insurers' denial of liver transplant has highlighted the need for greater legal protections for consumers.

Seventeen-year-old Nataline Sarkisyan died in 2007 after Cigna's denial of the transplant, but the law prevents her family from taking the insurer to court because of a legal loophole banning lawsuits if insurance is provided by a private employer. Thus 132 million Americans have no remedy if an insurer's denial kills their loved one. This is due to an errant Supreme Court ruling on the Employee Retirement Income Security Act, or ERISA. The lack of accountability allows HMOs and insurance companies to deny access to care without fear of reprisal.

Wendell Potter, a former health insurance executive-turned whistleblower, has stated that insurers pay closer attention to grievances by people whose health insurance policies do allow patients to hold the insurer accountable in court -- for instance government employees and people buying individual policies.

The Sarkisyan family was allowed to continue a lawsuit for emotional distress -- but only because an insurance executive made an obscene gesture to the family at a rally outside of CIGNA's headquarters. So currently a family can sue an insurance executive if he flips you the bird, but not if the insurer kills a loved one. Perhaps Cigna would prevail over doctors' recommendations in the Sarkisyan case in a court of law, but without the ability to even go to court, the limits of insurers' control over our health care goes untested.

In a system where Americans have no alternative to private insurers, the president and Congress should call explicitly for this change rather than trying to further limit patients' access to the courts.

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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.

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Isakson: Senate Needs to ‘Go Back to the Drawing Board’ on Health Care Reform

In a speech on the Senate floor, U.S. Senator Johnny Isakson, R-Ga., today criticized the health care reform proposal currently under consideration in the Senate Finance Committee and urged his colleagues to start the process over.

“There is common ground, but you've got to be willing to find it and so far that hasn't been the case. Ramming through something we can't read, we can't quantify and we can't score isn't the right way to go about this debate,” Isakson said. “This is too important for us to take a guess, too important for us to take a chance. It's imperative that Congress knows precisely what it's doing. We need to go back to the drawing board and have a bill we can read and a bill we can afford.”

In addition to criticizing the Democrats’ proposed tax increases and expansion of government into our health care, Isakson also said it’s difficult for the public to judge the merits of the Finance Committee plan when the Democrats refuse to make available the text of the legislation to members of Congress and the public.

Isakson also criticized Democrats for rejecting efforts to reduce frivolous medical lawsuits, which drive up costs and force doctors to order wasteful tests and treatments to cover liabilities. The Finance Committee proposal calls for only a non-binding ‘Sense of the Senate’ on medical liability.

On July 15, Isakson voted against the health care reform legislation that passed the Senate Health, Education, Labor and Pensions Committee on a 13-to-10 vote. Isakson argued the legislation would cost more than $1 trillion, would put the federal government in an unfair competition with private health insurers and managed care providers and would place a massive financial burden on Georgia and other states to pay for a proposed expansion of Medicaid.

Isakson is a co-sponsor of S.1099, Patients' Choice Act of 2009, which seeks to strengthen the relationship between the patient and the doctor by using choice and competition, rather than rationing and restrictions, to contain costs and ensure affordable health care for all Americans.
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