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.

NYT: Obama's Economic Team Already Calculating VAT Revenue

/PRNewswire/ -- President Barack Obama's economic team is already calculating government revenues from a possible Value Added Tax (VAT), according to the New York Times.

Article excerpt:

But since any Social Security plan would probably preserve benefits for those nearing retirement, it would not help the administration achieve its goal of reducing the deficit to 3 percent of gross domestic product, from 10 percent, within a decade.

One way to reach that 3 percent goal, by the calculations of Mr. Obama's economic team: a 5 percent value-added tax, which would generate enough revenue to simultaneously permit the reduction in corporate tax rates Republicans favor.

The reported VAT calculations may explain President Obama's recent attempts to alter the terms of his central campaign promise - a promise that no family making less than $250,000 per year would see "any form of tax increase".

Twice in the past ten days, Obama has claimed his pledge applied only to income taxes. In his April 10 Weekly Radio Address, Obama said:

"And one thing we have not done is raise income taxes on families making less than $250,000. That's another promise we've kept."

In a speech on the evening of April 15, Obama repeated the truncated promise:

"And one thing we haven't done is raise income taxes on families making less than $250,000 a year -- another promise that we kept."

In the interest of transparency, Americans for Tax Reform respectfully asks President Obama to immediately release the reported VAT calculations or deny such calculations exist.

Americans for Tax Reform is a non-partisan coalition of taxpayers and taxpayer groups who oppose all tax increases. For more information or to arrange an interview please contact John Kartch at (202) 785-0266 or by email at jkartch@atr.org.

AHIP Statement on Passage of Senate Health Care Reform Legislation

/PRNewswire/ -- Karen Ignagni, President and CEO of America's Health Insurance Plans (AHIP), released the following statement today on passage of Senate health care reform legislation:

"Providing all Americans with health care coverage is crucial for the country. Health plans support legislative changes that would provide guaranteed access to all Americans, with no pre-existing condition limitations and no health-status-based premiums. These reforms are essential to giving all Americans greater peace of mind and health security.

"At the same time, specific provisions in this legislation will increase, rather than decrease, health care costs; reduce coverage options; and disrupt existing coverage for families, seniors and small businesses - particularly between now and when the legislation is fully implemented in 2014.

"These issues can and should be addressed if health care reform is going to fulfill the promise of providing all Americans with guaranteed access to affordable, portable health care coverage."

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CBO Confirms That Premiums Will Increase Under the Senate Healthcare Reform Bill

/PRNewswire/ -- The Blue Cross and Blue Shield Association (BCBSA) issued the following statement regarding the estimate released today by the Congressional Budget Office (CBO):

The CBO today confirmed what many economists, actuaries, and health policy experts have said for weeks: the Senate healthcare reform bill would make coverage more expensive for millions of people buying individual insurance policies.

While CBO recognizes the significant impact of the proposal, it understates the effect in three areas:

-- Several provisions in the Senate bill will cause many people to wait
until they are sick to purchase coverage, significantly driving up
premiums for everyone. These include severely restricting discounts
for young people, very low financial penalties for not purchasing
coverage, while still requiring insurers to guarantee coverage
regardless of preexisting conditions. Many young people, in
particular, are likely to pay the nominal fine, rather than purchase
coverage that costs far more than the penalty.
-- Adding the previously uninsured will significantly increase premiums
in the individual market. Contrary to CBO, Oliver Wyman, Inc.'s
analysis of actual claims' costs in the individual market predicts
that the uninsured will actually be 20 percent more expensive to
insure than those in the individual market today. Had CBO adopted a
similar assumption, their premium impact would have been approximately
30 percent higher.
-- The impact will vary significantly by state because of regional
differences in rating laws today. Oliver Wyman, Inc. found that
two-thirds of Americans live in states where the average premium
impact will be much higher than a national average.


Caution should be used in describing CBO's results on how many people will see lower premiums because of the federal subsidies. It should be noted that many of these people were previously uninsured and therefore did not pay any premiums. While we strongly support extending coverage to everyone and providing needed subsidies, we should be careful not to misconstrue these as savings.

We are pleased that the debate is now focusing on how the bills will make coverage less affordable to the American people. We encourage the Senate to use the CBO findings, as well as the analyses of Oliver Wyman, to make much needed improvements to the Senate Patient Protection and Affordable Care Act to ensure that it will be affordable and sustainable for everyone.

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