| Jul 02 2010
Once again, a major health insurance company has been forced to rescind plans for double-digit rate hikes on California consumers after an independent investigation discovered "errors" in the formulas used to calculate the figures.
Aetna has scrapped plans for rate hikes of nearly 20 percent, just two months after Anthem Blue Cross -- a subsidiary of WellPoint, Inc. -- was forced to cancel controversial plans for rate hikes of nearly 40 percent. (Yesterday, Anthem submitted a new proposal for rate increases of up to 20 percent.)
Aetna and Anthem are passing these discrepancies off as honest mistakes, but I think the fact that two of California's four major health insurance companies were caught using flawed formulas to calculate rate is something that raises serious questions.
How could two separate multi-billion dollar companies make the same kind of mistakes -- miscalculations that nearly resulted in major increases in the cost of health insurance premiums? How many more errors will be found, in California and across the nation, if independent investigations were conducted on a wider sample of health insurance companies?
At a time of great hardship for many Americans, it is unconscionable that these mega-corporations can simply misplace a few decimal points and quickly rack up millions in unjust profits. Given the recent instances of corporate malfeasance that have shaken Wall Street to its core and created a disaster of historical proportions in the Gulf of Mexico, these actions beg for more scrutiny.
I believe it is time to shine a bright spotlight on how health insurance companies calculate the need for rate hikes. Two bills -- one pending in the United States Senate, and another awaiting action by the California state legislature -- would allow for greater scrutiny and oversight of the health insurance industry.
In March, I introduced legislation that would create a Health Insurance Rate Authority to empower the U.S. Secretary of Health and Human Services to review rate hike proposals and reject any that are not justified. States where the Insurance Commissioner already has authority to review and block rates would not be affected by this law. In states where insurance companies do not need approval to impose rate increases, this law would prevent unjustified rate hikes between now and 2014, when new health insurance exchanges go into effect.
Unless we take action, we can expect for-profit health insurance corporations to inflate premium rates as much as possible during this interim period.
President Obama supported my proposal and sought to have it included in the health insurance reform that passed into law, but Senate procedural rules resulted in its exclusion from the final package. I am continuing to work across party lines in Washington to build support for a version of the bill, but this is a painstaking process in a Senate chamber that is more divided than I have ever seen it.
California's state leaders, however, can take immediate action to protect the state's consumers from unfair rate hikes by supporting Assembly Bill 2578, which was passed by the Senate Health Committee last week. AB 2578, authored by Assemblymen Dave Jones and Mike Feuer, would require health insurance companies to receive state approval before increasing premium rates. If the bill is signed into law, California would become one of those states - like New York and some 25 others -- where Insurance Commissioners have the power to protect consumers from greedy rate hikes.
The decision by Anthem and Aetna to withdraw their flawed rate hike proposals provides a temporary reprieve for hundreds of thousands of Californians, but they only halted the hikes after their bad math was revealed. This problem is not going away -- and it may be more widespread than we imagine.
There's only one way to find out. We must grant the Secretary of Health and Human Services -- or the state insurance commissioner -- the power to review and reject unfair rate hikes. Without independent actuarial reviews of Anthem and Aetna, Californians would have overpaid their health insurance premiums by tens of millions of dollars.
We must plug the Rate Hike Loophole. I will continue to work on a national solution to the problem in Washington, but state leaders must act with urgency to protect Californians from health insurance corporation greed. Too many Californians are struggling to pay their bills and make ends meet, and they shouldn't have to worry about losing their health insurance because they can't afford it.
They need, and deserve, urgent action to protect them from unjust rate hikes.