No rebates coming for Wellmark health insurance policy-holders

Iowans who buy health insurance through Wellmark Blue Cross and Blue Shield won’t be getting premium rebates anytime soon. Wellmark has a near-monopoly on Iowa’s individual and employer health insurance market. After the company announced last summer that it would not participate in the state’s health insurance exchange during its first year of operation, Democratic State Senators Jack Hatch and Matt McCoy questioned why the company was holding about $1.3 billion in reserves. The senators argued that the Iowa Insurance Division had previously justified Wellmark’s large cash reserves on the grounds that the company would be selling policies through the health exchange created under the 2010 Affordable Care Act. Hatch and McCoy asked Iowa Insurance Commissioner Nick Gerhart to study the issue, and in November, Gerhart retained Risk and Regulatory Consulting to investigate Wellmark’s reserve levels.

The consultants’ report, made public yesterday, concluded that Wellmark’s cash reserves are “reasonable and prudent.” Click through to read the full six-page report at the end of the article by Tony Leys of the Des Moines Register.

I’ve enclosed below a few excerpts from Leys’ report, Hatch’s letter to Gerhart last July, which provides background on the issue, and the joint statement Hatch and McCoy released yesterday. They noted that Wellmark “will be using its current reserves to protect them from risks that do not exist for them; namely, the Insurance Marketplace Exchange.” Hatch and McCoy added that the report “puts to rest the notion that the ACA could ever be the basis for a future premium increase by the company, at least in the next three years.”

After many years of double-digit percent increases in health insurance premiums, Wellmark did not raise premiums for many of its individual customers this year, presumably to deter them from shopping for a better deal on Iowa’s exchange. I predict Wellmark will cite the 2010 health care reform law as an excuse for raising premiums again before too long. Iowa individuals and families can purchase policies on the exchange from either Coventry or Co-Oportunity Health. Only Co-Oportunity is selling employer health insurance plans through Iowa’s exchange.

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Iowa joins antitrust suit over e-book price-fixing

Iowa Attorney General Tom Miller was one of 16 state attorneys general to file a federal antitrust lawsuit yesterday against Apple Inc. and three major U.S. publishers. The complaint alleges that the publishers and Apple conspired to raise prices on electronic books, causing consumers to be overcharged by more than $100 million. The U.S. Department of Justice filed a similar lawsuit against Apple and two publishers in a different federal court.

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Harkin will help hash out financial reform compromise

Senator Tom Harkin is among 13 senators (eight from the Banking Committee, five from the Agriculture Committee) named to the conference committee that will reconcile differences between the financial reform bills approved by the House last December and the Senate last week. The House will also have 13 representatives on the conference committee. For lists of the key differences between the bills, see Pat Garofalo’s Wonk Room chart and this post by David Dayen. Harkin’s office released this statement on Tuesday:

“Over the last year, Wall Street has repeatedly tried to kill this reform with hundreds of lobbyists and millions of dollars in ads. From my seat at the table, I look forward to ensuring that effort will have been in vain,” Senator Harkin said. “I plan to do everything in my power to preserve the bill’s integrity, strengthen its consumer protections, and stop the reckless financial wheeling and dealing that destabilized our economy and threw millions of Americans out of work. And, given the dangers they pose if not properly regulated, I plan to focus on preserving the key reforms in the Senate-passed derivatives portion of the bill. The Restoring American Financial Stability Act is a step in the right direction, and I look forward to improving it in conference.”

He’ll have his work cut out for him if he wants to preserve the Senate language on derivatives. Dayen wrote last week,

Everyone expects the 716 provision, which forces the mega-banks to spin off their swaps trading desks, to be excised in conference. But Michael Greenberger believes something like it will be retained. The House’s derivatives piece is a mess and nearly useless, but [conference committee chairman] Barney Frank has admitted a mistake on that front, and wants to preserve strong rules against derivatives, like in the Senate bill.

The smart money is on the conference committee dropping the strong derivatives language after the Arkansas Democratic primary runoff election on June 8. Until then, corporate hack Senator Blanche Lincoln needs to be able to brag about standing up to Wall Street lobbyists.

Here’s another battle Harkin should fight during the conference negotiations. On Monday the Senate passed a non-binding instruction to the conference committee supporting “a special exemption to shield automobile dealers from the oversight of a new Bureau of Consumer Financial Protection.” The House bill already contains that exemption. Harkin was among the 30 senators who voted against that instruction, while Republican Chuck Grassley was among the 60 who voted to limit the oversight of the new consumer protection unit. Of the 13 senators named to the conference committee, six voted against the instruction on automobile dealers, four voted for it, and three did not vote (roll call).

According to the White House blog,

The President has been clear on this issue, repeatedly urging members of the Senate to fight efforts of the special interests and their lobbyists to weaken consumer protections.  The fact is, auto dealer-lending is an $850 billion industry, which is larger than the entire credit card industry and they make nearly 80 percent of the automobile loans in our country.

Is there any question that these lenders should be subject to the same standards as any local or community bank that provides loans?

Auto dealer-lenders sell auto loans to working families every single day, and while most dealers are no doubt above board, some cannot resist the bigger profits that come from inflating rates, hiding fees, and tacking on over-priced add-ons.

In this kind of situation, President George W. Bush would make his demands clear and tell members of Congress to send him “a bill I can sign.” We’ll see how far President Obama is willing to go to keep consumer protection provisions in the Wall Street reform bill.  

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Democrats, please get payday lending reform right

Key Democratic lawmakers will push for new limits on payday lending during the Iowa legislature’s upcoming session, which starts on January 12. State Senator Joe Bolkcom, who chairs the Senate Ways and Means Committee, called for restricting the “loan shark rates” the industry typically charges. The Iowa Catholic Conference also supports limiting the interest rate for payday loans to 36 percent. That’s welcome news. Although 36 percent interest is still quite high, it’s a lot better than the 300 to 400 percent interest rates payday lenders are in effect currently charging customers.

In 2007, the Iowa legislature had smaller Democratic majorities yet managed to pass a bill capping interest rates on car-title loans at 21 percent. (Former Governor Tom Vilsack and Attorney General Tom Miller had advocated that reform for a long time, but Republican leaders refused to allow a vote in the Iowa House when they controlled the chamber.)

In theory, it shouldn’t be hard for House Democrats to find 51 votes out of their 56-member caucus to pass payday lending reform. However, at yesterday’s press conference with Senator Bolkcom, State Representative Janet Petersen expressed doubt that an interest rate cap could pass the House Commerce Committee, which she chairs.

I hope we’re not in for another round of a few Iowa House Democrats blocking legislation that would serve the public interest. More thoughts on this issue are after the jump.

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