- Wall Street-run health insurance companies took in $7 billion in profits in the first half of 2011.
- Between 2008 and 2011—in the midst of recession—profits of the five largest for-profit health insurance companies increased 61%.
- Even as profits skyrocketed, premiums for employer-based family coverage in California increased 153% between 2002 and 2011.
Meanwhile insurance companies are covering fewer and fewer Americans. In 2010, the Census Bureau estimated nearly 50 million Americans were uninsured. California has the largest uninsured population in the nation—6.9 million people lack health insurance.
To compound the problem, insurance companies have been reducing the amount they spend on actual health care. As profits and CEO pay increased, the amount of money insurers spent on medical care went down.
The health reform law takes critical first steps to help control premium increases and ensures that companies spend more on medical care, not profits. However, the law does not grant explicit authority to block or modify egregious rate increases.
Health Insurance Rate Review Act:
Senator Feinstein is the Senate sponsor of the Health Insurance Rate Review Act, a bill designed to close this loophole.
The bill creates a federal fallback rate review process that grants the Secretary of Health and Human Services authority to block or modify rate increases that are excessive, unjustified or unfairly discriminatory.
Today, state regulators in at least 17 states, including California, lack this authority.
The legislation is a simple, commonsense solution. In states where the appropriate state regulator lacks authority to block unfair rate increases, the Secretary of Health and Human Services can do so.
Health insurance rates in California:
Insurance companies in California and across the country continue to propose dramatic health insurance premium increases.
California has a very strong Insurance Commissioner, Dave Jones, who has been proactive to protect hundreds of thousands of Californians from unjustified rate increases. But the bottom line is that he does not today have the authority to block unjustified rate hikes.
Without action, policyholders face the possibility of continued rate increases between now and 2014 when the Exchanges are put in place. Senator Feinstein will continue working to make sure health insurance companies cannot continue to jack up premiums on policyholders.