Approximately 80,000 Iowans will face substantial health insurance premium hikes beginning May 1. An independent review has confirmed the "need" for Wellmark Blue Cross and Blue Shield to raise rates by an average of 18 percent. The higher rates were intended to go into effect on April 1, but last month Governor Chet Culver ordered a delay pending an review of the matter. The Des Moines Register reports today,
[Iowa Insurance Commissioner Susan] Voss said in a memo to Culver that Wellmark's losses supported "the need for the rate increase" based on two separate actuarial analyses conducted by INS Consultants, a Philadelphia actuary. The group also found that the insurance division's rate review process is actuarially "acceptable" and "reasonable" compared with INS's methodology.
Birny Birnbaum, head of the Center for Economic Justice, a nonprofit consumer advocacy group in Texas, said it's unlikely that INS would disagree with the rate increase.
"While INS is technically independent, there is no way the firm would contradict and embarrass the agency which hired the firm," Birnbaum said Monday. "If INS were to contradict the insurance division, it would likely not be hired in the future by the Iowa Insurance Division or any other insurance regulator."
Speaking to the Register, State Representative Janet Petersen touted legislation passed during the 2010 session, which is intended to give consumers more information and warning regarding health insurance premium increases. After the jump I've posted some key points from Senate File 2201 and Senate File 2356.
These bills contain a lot of good provisions but probably won't solve this particular problem for many Iowans. Wellmark dominates the insurance market in this state. Giving people a few weeks to shop around won't magically allow them to find a better deal. In addition, health insurers can still exclude coverage for pre-existing conditions until 2014. The only real choices Wellmark's individual customers have are: 1) pay a lot more, like my family, or 2) downgrade to a policy that's less comprehensive and/or involves higher out-of-pocket costs for medical care.
Iowa House Republican leader Kraig Paulsen showed his creative side yesterday, finding a way to blame Democrats for Wellmark's rate hikes:
Paulsen pointed out that the Democrat-controlled Legislature has voted in recent years to impose several health insurance mandates, such as coverage of cancer clinical trials and prosthetics.
"It's indisputable that those add to rates. That's just the way it works," he said.
Health insurance mandates drive up costs for Iowans, Paulsen said.
"Mandates aren't necessarily requirements that insurance companies sell something. They're requirements that purchasers buy something," he said.
One legislative proposal would have allowed state-regulated health insurance companies to provide mandate-free coverage "for those who want a less comprehensive product," Paulsen said.
That idea by House Republicans failed, as did a proposal to study allowing out-of-state insurers to offer policies in Iowa, which could help Iowans find cheaper policies, he said.
Come on, Mr. Paulsen, who ever anticipates needing prosthetics someday, or being in a position to benefit from a cancer clinical trial? Anyway, that cancer clinical trial bill passed both the Iowa House and Senate unanimously. Also, allowing out-of-state insurers to sell policies here would spark a "race to the bottom" in terms of consumer protection.
Share any relevant thoughts in the comments.
Health Insurance Rate Transparency: Insurers now notify policyholders of rate increases on approval, typically 30 days before the rate takes effect. This does the following: 1. Requires notice when the insurer applies for an increase, including a description of those
factors that make the increase necessary.
2. Requires the Insurance Consumer Advocate to solicit public comments on each proposed
rate increase and post them on the Insurance Division's Internet site.
3. Requires the Insurance Commissioner to hold a public hearing if the proposed increase
exceeds the national average annual health spending growth rate.
4. Creates a Health Insurance Work Group with health insurers, health care providers, small
employers, and individual consumers, which will meet every year to consider ways to
reduce costs of health insurance and health care services.
5. Requires the Insurance Commissioner and Consumer Advocate to file an annual report
with the Legislature regarding health insurance plans, including loss ration data, health care expenditures, factors that result in higher costs or lower costs for each health
insurance plan, medical cost trends, and any other useful information.
6. Creates an Iowa Insurance Exchange on the Insurance Division's internet site to post
comparative health insurance information, including insurance plan designs, premium rate
filings and approvals, health care cost data, and any other useful information. (Senate File 2201 & Senate File 2356 - Sent to the Governor; effective July 1, 2010)