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
Showing posts with label insurers. Show all posts
Showing posts with label insurers. Show all posts
Wednesday, September 30, 2009
Monday, May 11, 2009
President Obama, Sens. Kennedy & Baucus: Don't Buy Insurer 'Compromise' for Bush-era Plan to Gut State Consumer Protection Laws
/PRNewswire/ -- President Obama and U.S. Senate health care reform leaders must not override state consumer protection laws as suggested by health insurers last week, a move long-supported by insurers and the Bush Administration, said Consumer Watchdog in a letter to the president and senators. The hard-fought state laws enacted in nearly every state over the last 10 years were made necessary because Congress failed to enact Patients' Bill of Rights legislation.
In the letter, Consumer Watchdog wrote:
"Federal regulation would be a boon to the industry, and has long been on the insurer's wish list because over the last decade almost every state has developed comprehensive patient protection laws that the insurers loathe.
"Insurers would like to take advantage of the moment of reform to eviscerate HMO Patients' Bill of Rights laws enacted in nearly every state and replace them with window-dressing federal rules that clear the way for the worst of the industry's practices."
The insurers' proposal was floated last Tuesday during the U.S. Senate Finance Committee by Karen Ignagni, CEO of the HMO and health insurer lobbying organization, America's Health Insurance Plans.
Consumer Watchdog called the insurers' proposal to kill the "public option" to private insurance coverage -- the reform that the industry hates most because of its value to consumers -- in exchange for new federal regulation of the industry a "false compromise."
In the letter, Consumer Watchdog wrote:
"Insurers are not conceding a thing. They are trying to turn the squelching of a beneficial public option into a double victory. They need all of you to play along with the charade in order to succeed in killing state patient protections as well as any government competitor. If you allow the insurance industry to prevail in this deception, the worst public fears about insurers' lobbying power in Washington will be proven correct."
A similar window-dressing federal regulation scheme was last brought forward in Senator Mike Enzi's (R-WY) bill, S. 1955, in 2006 which would have gutted HMO Patients' Bill of Rights laws and state common law access to courts by enacting President Bush's promised "Association Health Plans" expansion.
In the letter, Consumer Watchdog wrote:
"The Enzi bill was described in terms similar to those used by Ignagni ... to describe the federal 'standards' the insurers are willing to accept if the public option is taken off the table. Such 'harmonization' at the federal level of 'inconsistent' state laws will result in lowest common denominator regulations enforced from an impossible distance. Done the industry's desired way, an individual's state common law right to sue an insurer for even the most egregious misbehavior would also be erased."
Ignagni has also promised the industry's agreement to cover all Americans regardless of health, and not to charge more based on characteristics like health status or gender. Even these apparent concessions are far from hardships for the insurance industry, said Consumer Watchdog, in the context of their demand that all Americans be required to purchase their product.
** Read Consumer Watchdog's analysis of health insurer and drug company contributions to members of Congress. Senator Max Baucus (D-MT), chairman of the Senate Finance Committee, received more campaign contributions from the health insurance and pharmaceutical industries than any other current Democratic member of the House or Senate; the third highest contributions of any member of Congress. http://www.consumerwatchdog.org/patients/articles/?storyId=25468
** Read about a recent national poll that found that 65% of voters support giving every American of any age the option of joining Medicare; 60% are willing to pay more in payroll deductions for this option. http://www.consumerwatchdog.org/patients/articles/?storyId=24826
** Read about a national poll that found, by contrast, that only 16% of U.S. voters support, and 53% oppose, the insurance industries' plan of requiring every American to provide proof of private health insurance or face tax penalties or other fines. http://www.consumerwatchdog.org/patients/articles/?storyId=24110.
-----
www.politicalpotluck.com
Political News You Can Use
In the letter, Consumer Watchdog wrote:
"Federal regulation would be a boon to the industry, and has long been on the insurer's wish list because over the last decade almost every state has developed comprehensive patient protection laws that the insurers loathe.
"Insurers would like to take advantage of the moment of reform to eviscerate HMO Patients' Bill of Rights laws enacted in nearly every state and replace them with window-dressing federal rules that clear the way for the worst of the industry's practices."
The insurers' proposal was floated last Tuesday during the U.S. Senate Finance Committee by Karen Ignagni, CEO of the HMO and health insurer lobbying organization, America's Health Insurance Plans.
Consumer Watchdog called the insurers' proposal to kill the "public option" to private insurance coverage -- the reform that the industry hates most because of its value to consumers -- in exchange for new federal regulation of the industry a "false compromise."
In the letter, Consumer Watchdog wrote:
"Insurers are not conceding a thing. They are trying to turn the squelching of a beneficial public option into a double victory. They need all of you to play along with the charade in order to succeed in killing state patient protections as well as any government competitor. If you allow the insurance industry to prevail in this deception, the worst public fears about insurers' lobbying power in Washington will be proven correct."
A similar window-dressing federal regulation scheme was last brought forward in Senator Mike Enzi's (R-WY) bill, S. 1955, in 2006 which would have gutted HMO Patients' Bill of Rights laws and state common law access to courts by enacting President Bush's promised "Association Health Plans" expansion.
In the letter, Consumer Watchdog wrote:
"The Enzi bill was described in terms similar to those used by Ignagni ... to describe the federal 'standards' the insurers are willing to accept if the public option is taken off the table. Such 'harmonization' at the federal level of 'inconsistent' state laws will result in lowest common denominator regulations enforced from an impossible distance. Done the industry's desired way, an individual's state common law right to sue an insurer for even the most egregious misbehavior would also be erased."
Ignagni has also promised the industry's agreement to cover all Americans regardless of health, and not to charge more based on characteristics like health status or gender. Even these apparent concessions are far from hardships for the insurance industry, said Consumer Watchdog, in the context of their demand that all Americans be required to purchase their product.
** Read Consumer Watchdog's analysis of health insurer and drug company contributions to members of Congress. Senator Max Baucus (D-MT), chairman of the Senate Finance Committee, received more campaign contributions from the health insurance and pharmaceutical industries than any other current Democratic member of the House or Senate; the third highest contributions of any member of Congress. http://www.consumerwatchdog.org/patients/articles/?storyId=25468
** Read about a recent national poll that found that 65% of voters support giving every American of any age the option of joining Medicare; 60% are willing to pay more in payroll deductions for this option. http://www.consumerwatchdog.org/patients/articles/?storyId=24826
** Read about a national poll that found, by contrast, that only 16% of U.S. voters support, and 53% oppose, the insurance industries' plan of requiring every American to provide proof of private health insurance or face tax penalties or other fines. http://www.consumerwatchdog.org/patients/articles/?storyId=24110.
-----
www.politicalpotluck.com
Political News You Can Use
Subscribe to:
Posts (Atom)