Pending Senate bill would plug "premium hole" in health care reform law

Many Americans are unaware that, under the Pension Protection and Affordable Care Act (PPACA), nothing prevents insurers from drastically raising premium rates on insurance policies. They are also unaware that a bill was introduced in the Senate in March by Sen. Dianne Feinstein (D-Calif.) to address that issue. The bill, S. 3078, gives the National Association of Insurance Commissioners (NAIC) the authority to define what would constitute an unreasonable insurance rate increase. NAIC would also provide a report on each state’s authority to review rates and take corrective action in each insurance market, and methodologies used in such reviews and rating requests received by each state.

While groups such as the American Cancer Society Cancer Action Network (ACS CAN) applaud the attempt to control unreasonable premium increases, some, such as Consumer Watchdog, are concerned that, in its current form, the bill would give too much power to the insurance industry, since the NAIC is industry funded. Consumer Watchdog recommends amendments to clarify that it is the HHS, not the insurance industry, that has the sole authority to make decisions.

Others feel that the bill already goes too far.

Kentucky state lawmaker Robert Damron, (D-Frankfort) president of the National Conference of Insurance Legislators, has sent a letter to Sen. Christopher Dodd, (D-Conn.), questioning “the need to allocate oversight of insurance regulation to yet another federal system.” In the letter, Damron adds that, “State health insurance regulation has been fashioned to respond to each state’s unique health landscape and has been honed over years of experience.”

S. 3078 has been referred to the Committee on Health, Education, Labor, and Pensions.

For a comprehensive analysis of the Patient Protection and Affordable Care Act, and additional information on health reform and other developments in employee benefits, just click here.