The effort of Sen. Dianne Feinstein, D-Calif., to add a provision to financial services reform legislation now pending in the Senate that would establish a federal health insurance rate authority is raising alarms in the insurance industry.
It is just one among a number of new developments prompted by the historic health care reform legislation that Congress passed last month.
Other developments include a growing trend by insurers to accelerate their offering of health insurance for young adults graduating from college or aging out of their parents’ plan beyond that mandated by the new law.
Meanwhile, by May 3, the Department of Health and Human Services is expected to release interim final guidance on a number of provisions of the reform law, including new plan requirements, coverage of dependents to age 26, plan rescissions and restrictions on pre-existing condition exclusions for children up to age 19.
HHS is also asking for public comment on regulations regarding the development of medical loss ratios and the rate filing process and review of rate increases.
At the same time, the National Association of Insurance Commissioners has formed groups to look at both of these issues, according to industry lawyers and lobbyists.
And, in a new development in that area, WellPoint agreed to a request by the leadership of the three House committees to immediately end the practice of rescission-terminating an individual’s coverage once he or she becomes sick-except in cases of fraud or material misrepresentation.
Under that pressure, industry officials believe that other insurers would also soon agree to comply. The bill mandates that a rescission cease in all plans that go into effect after Sept. 23, which, in practice most likely means early next year, an industry official said.
But, Brett Lieberman, an official of the Blue Cross and Blue Shield Association, said accelerating the end of rescission would likely have little impact. “Rescissions are a very rare occurrence,” he said.
A recent NAIC study, Lieberman said, shows they occur in approximately one-tenth of 1 percent of individual market policies each year.
On another request from the lawmakers, Lieberman said Blue Cross and Blue Shield companies “have long supported third-party reviews of a company’s decision to rescind a customer’s policy.”
He added, “We have just received the committee request and will review the letter and respond to the committee.”
At the same time, the chief actuary of the Centers for Medicare and Medicaid Services issued a report indicating that the new law will likely have a different impact than suggested by other analysts and by Democratic supporters of the bill.