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The 'Big 3' Fixes for the Weakened Senate Health Reform Bill to Block Full Insurance Co. Take-Over of Health System
Date:12/15/2009

Consumer Watchdog Calls For Preserving State Authority, Ban on Annual Benefit Limits, & Effective Rate Regulation

WASHINGTON, Dec. 15 /PRNewswire-USNewswire/ -- Consumer Watchdog condemned the removal of the Medicare buy-in provision for those over 55 and the public option from the U.S. Senate health reform bill. But the group said that the Senate must still make three essential fixes to the greatly weakened bill to prevent ceding the entire health care system to the insurance industry.

Without the changes, said the consumer advocacy group, the legislation will fail even to provide basic consumer protections of cost containment, access to necessary care, and protection against bankruptcy when patients get sick and need coverage the most.

Consumer Watchdog said that it is essential that the bill be fixed now because there is a growing belief that a conference committee will be bypassed altogether, and instead the House of Representatives will be pushed to approve the Senate bill with no amendments. The three key fixes, detailed below, are:

1. Remove Provisions that Would Pre-empt More Protective State Laws

2. Bar Insurers From Placing Annual Limits on Medical Payments

3. Make Health Insurance Rate Regulation Real

"If health care reform is really about consumers and patients, then Senators must make these fixes before they pass the bill," said Jerry Flanagan, health policy director of Consumer Watchdog. "Current provisions of the Senate bill requiring Americans to buy insurance policies, while gutting state laws and ineffectively capping what insurers can charge for bare bones coverage, add up to a dream bill for insurance companies."

"Eliminating the public option, pre-empting state health benefit laws and avoiding tough rate oversight is an insurance company hat trick - the top three legislative goals of the insurance industry of the last twenty years," said Flanagan. "If health reform is going to be worth anything to consumers, Senators must fight back on these three points. Without them, health reform is little more than a scheme for health insurers to increase profits at the expense of patients and taxpayers."

The three changes that the U.S. Senate must make to HR 3590 are:

1. Remove Provisions that Would Pre-empt More Protective State Laws

For 60 years, states have been responsible for the oversight of health insurance. States have traditionally been the laboratories of innovation in health care and insurance reform. States also have a greater ability to respond quickly to local needs.

However, provisions in the current bill could replace hard-fought "Patients Bill of Rights" laws with new, weaker federal protections.

For example, section 1333 on page 219 of the Senate bill allow health insurers to avoid strong state patient protection laws under so-called "nationwide plans" and multistate "compacts." Under these provisions, health insurers that sell policies in more than one state would only be regulated by the state where the policy was "written or issued." Therefore, if an insurer "issues" all of its policies from Wyoming, then the laws of Wyoming would control policies sold to consumers in states with more protective laws like California, New York, Texas or Virginia.

Insurers would certainly elect to issue their policies from the states with the weakest laws. As a result, new federal minimum coverage requirements would become the norm. Coverage of AIDS/HIV testing, reconstructive surgery, home health care services, and child delivery and mastectomy minimum hospital stays, for instance, would likely be lost.

The Senate health reform bill should be modeled on existing federal health care laws, which provide for a federal-state partnership rather than federal pre-emption of more protective state standards. Minimum federal standards should set a floor, not a ceiling, on state health care protections. Read Consumer Watchdog's analyses of the pre-emption provisions and the group's letter to Senate Majority Leader Harry Reid at:

http://www.consumerwatchdog.org/patients/articles/?storyId=31197

Read the Los Angeles Times coverage of the pre-emption provisions:

http://www.consumerwatchdog.org/patients/articles/?storyId=31200

2. Bar Insurers From Placing Annual Limits on Medical Payments

A cornerstone of national health reform is to ensure that patients get the care their doctor prescribes when they are sick and need treatment the most. An essential element to reach that objective is to bar insurance companies from placing annual limits on how much health care a patient can receive.

Current caps mean that patients with serious illnesses, including many cancers, can be left without coverage in the midst of treatment. As a result, patients face bankruptcy even though they have insurance. In fact, a Harvard Medical School study released this year found that 62% of U.S. bankruptcies were caused by big medical bills, while 78% of those declaring bankruptcy had insurance.

A loophole in the Senate bill would allow health insurers to impose unspecified "reasonable" annual limits on the annual dollar value of benefits that patient can receive this year. This is a major departure from previous version of the Senate bill, and the House legislation, which bar any annual caps.

The Senate bill cites section 223 of the Internal Revenue Code, which regulates Health Savings Accounts. That section does not define "reasonable" annual limits. As a result, health insurers will be left to define "reasonable" as they see fit. However, for an insurance company, a "reasonable" limit on annual health care costs is one that increases shareholder profits by cutting off access to necessary care.

3. Make Health Insurance Rate Regulation Real

Requiring insurance companies to justify rate increases and seek "prior approval" for those increases are essential components to controlling skyrocketing health insurance premiums, deductibles, and other out-of-pocket costs.

Page 37, section 2794 of HR 3590 provides some additional transparency on insurance premiums and takes some first steps toward limits on insurance company gouging, but does not provide real protections for Americans by, for instance, requiring insurers to seek approval before imposing premium and rate increases.

Consumer Watchdog, which pioneered the most successful insurance premium regulation law in the nation, Proposition 103, calls on the Senate to adopt amendments reflecting key provisions of California's landmark insurance reform law, including:

  • Mandatory justification of any rate increase (including premiums, deductibles, co-pays), not merely justifications of "unreasonable" premium increases.
  • Mandatory prior approval, which means requiring insurers to seek permission from government regulators, in addition to justifying rate increases, before imposing rate increases. Since 1988, California's Proposition 103 has saved drivers $62 billion while fostering a competitive and profitable insurance market.
  • An intervenor system that provides consumers a forum to challenge unnecessary or excessive rate increases. Since 2003, Consumer Watchdog has saved the state's consumers $1.7 billion by challenging unnecessary premium increases using the public intervention process.

Read about California's landmark law to rein in gouging by property and casualty insurers at: http://www.consumerwatchdog.org/insurance/articles/?storyId=19888

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


SOURCE Consumer Watchdog


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SOURCE Consumer Watchdog
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