THE BLOG

Pass Rate Review Legislation to Keep Health Insurance Premiums Down

10/06/2011 10:20 am 10:20:07 | Updated Dec 06, 2011

As steps are being taken under the health reform law to stabilize insurance rates, lower costs and coordinate care, a recent survey shows that health insurance premiums continue to rise.

Over the past year, the average cost for employer-sponsored family health insurance plans has skyrocketed by 9 percent, according to a recent report by the nonpartisan Kaiser Family Foundation -- a rate four times faster than inflation.

During the same period, real average hourly earnings have decreased by nearly 2 percent.

In fact, premiums for both family and individual coverage have more than doubled since 2001, with average annual premiums for families with employer-sponsored coverage now topping $15,000. As health care costs continue to force families to dig deeper into pocketbooks, we find ourselves on an unsustainable path.

Meanwhile, profits of the largest for-profit health insurance companies continue their upward trend. Between 2008 and 2010, the combined profits of the five largest for-profit health insurance companies increased 51 percent. In the second quarter of 2011, profits for those companies rose to $3.4 billion, 13.5 percent higher than the same period in 2010.

It has become clear to me that insurance companies will continue to impose unfair rate increases on consumers unless state and federal regulators have the authority to block them.

The health reform law requires that insurance companies spend a higher percentage of premium dollars on medical care and less on profits, and that any rate increases over 10 percent be publicly justified.

But I want insurance companies to go even farther, which is why I am working hard on rate review legislation.

Earlier this year I introduced the Health Insurance Rate Review Act, a bill that gives the Secretary of Health and Human Services the authority to block or modify unjustified rates in states where regulators do not have this authority. This is critical protection for consumers and is underscored by Kaiser's annual survey.

This bill would empower all states by allowing them to approve or reject any plans to raise insurance premiums. The Kaiser Family Foundation reports that in at least 17 states -- including California -- state regulators do not possess the authority to block or modify premium rates prior to implementation.

Interestingly, officials in some states can reject excessive rates for auto, property and casualty insurance, saving consumers millions of dollars. I believe state regulators need the same authority to regulate health insurance rates to prevent abusive increases.

Rather than allowing American workers to be stuck with excessive premium increases to pad the pockets of huge insurance companies, it is time to pass rate review legislation to keep insurance premiums down.

Dianne Feinstein represents California in the United States Senate.