Controlling health insurance prices without controlling the underlying health care costs will destabilize the U.S. health care system, Karen Ignagni has warned members of a key Senate committee.
Ignagni appeared as a witness at a hearing of the Senate Health, Education, Labor and Pensions Committee on “protection from unjustified premiums.”
The new Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act is supposed to put a new individual and small group premium rate review program into effect in 2014.
But Sen. Dianne Feinstein, D-Calif., said at the hearing that she supports creating a premium rate review program for states that do not already review health insurance rate increases.
“The legislation I have introduced simply provides federal protection for consumers who are currently at the mercy of large health insurance companies whose top priority is their bottom line,” Feinstein said, according to a written version of her remarks posted on the committee’s website. “Health insurance should be no different than utilities. Water and power are essential for life. So they are heavily regulated and rate increases must be approved.”
Ignagni, president of America’s Health Insurance Plans, Washington, said Congress has to do something about the cost of health care before it can do much to hold down the cost of health coverage in a realistic fashion.
The unit price of medical services has been increasing faster than the overall inflation rate, and doctors and hospitals now have more power to negotiate higher payment rates, Ignagni testified.
“One AHIP member operating in a large state reported facing hospital rate increases ranging between 7% and 90%, with the average request at 29%,” Ignagni testified, according to the written version of her remarks. “Another AHIP member reported that a ‘must have’ hospital was demanding a 40% increase in payment and insisting on contractual terms that would prohibit the plan from sharing the facility’s quality information with consumers.”
Another AHIP member says a suburban New Jersey hospital is asking commercial plans to pay an extra 15% to 16% to make up for Medicaid and Medicare cost shifting, Ignagni said.
“Capping rates only delays the increase needed and compounds the subsequent increases,” Ignagni said. “Regulators who establish artificial caps on premium rates that do not reflect the underlying components place health plans in jeopardy of weakened financial conditions, creating larger fluctuations in premiums and needless volatility for consumers.”