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Obama Adopts Feinstein Insurance Rate Hike Proposal

February 22, 2010 - by Eric Naing

As part of the White House health care plan, President Obama wants to give the federal government the authority to block “unreasonable” rate hikes by health insurance companies.

Earlier this month California-based Anthem Blue Cross, a subsidiary of health insurance mega-company WellPoint, announced that it would be increasing the cost of insurance premiums for thousands of its customers. In some cases, the premiums would be jump by as much as 39 percent.

The rate hike sparked an outcry from Health and Human Services Secretary Kathleen Sebelius.

In response, President Obama wants to create a board to monitor unfair insurance rate hikes and give the HHS the power to stop them:

A new Health Insurance Rate Authority will be created to provide needed oversight at the Federal level and help States determine how rate review will be enforced and monitor insurance market behavior.

The New York Times explains how it works:

The president’s bill would grant the federal health and human services secretary new authority to review, and to block, premium increases by private insurers, potentially superseding state insurance regulators. The bill would create a new Health Insurance Rate Authority, made up of health industry experts that would issue an annual report setting the parameters for reasonable rate increases based on conditions in the market.

The legislation would call on the secretary of health and human services to work with state regulators to develop an annual review of rate increases, and if increases are deemed “unjustified” the secretary or the state could block the increase, order the insurer to change it, or even issue a rebate to beneficiaries.

This idea was adopted from a proposal put forth by Sen. Dianne Feinstein [D, CA]. During the health care debate last year, Feinstein proposed an amendment (S.AMDT.3030) to the Senate health care bill (H.R.3590) establishing a seven-member Health Insurance Rate Authority to review insurance rate hikes. Feinstein this month fleshed the idea out more as a proposed standalone bill.

Under Feinstein’s proposed bill, the seven-member board would be composed of two consumer advocates, one medical expert, on insurance industry representative, and three other experts.

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