Feinstein's Federal Rate Authority Proposal Is Raising Alarms In The Industry

Specifically, Richard Foster, the actuary, said in his report that by 2019, an estimated 13 million workers and family members would become newly covered as a result of additional employers offering health coverage, a greater proportion of workers enrolling in employer plans, and an extension of dependent coverage up to age 26.

However, he cautioned, for a number of reasons, the number of persons with employer coverage in 2019 under the new law will be 1 million lower under the reform plan than under prior law.

Among the reasons for this is that a number of workers who now have employer coverage would likely become enrolled in the expanded Medicaid program or receive subsidized coverage through the exchanges that will be created under the new law.

One of the reasons that is likely to occur, Foster said, is that the per-worker penalties assessed on nonparticipating employers “are relatively low compared to prevailing health insurance costs.” As a result, he explained, “the penalties would not be a substantial deterrent to dropping or forgoing coverage.”

Moreover, he said, because the subsidies currently provided under the Medicare Advantage program will be reduced, “We estimate that in 2017, when the MA provisions will be fully phased in, enrollment in MA plans” will be half its current total, from the projected level of 14.8 million under the prior law to 7.4 million under the new law.

As to her proposal, Feinstein said the provision she wants to add to the bill would give the Secretary of Health and Human Services the authority to see that rates are reasonable.

Officials at the National Association of Health Underwriters and the Council of Insurance Agents and Brokers immediately voiced concern about the provision.

NAHU officials said her proposal “is not necessary” and added that it could in fact “be harmful by trying to take insurance principles further out of insurance.”

NAHU spokesperson Kelly Loussedes said, “Policymakers need to recognize that premium increases are the result of numerous factors, including increases in the price per medical service and greater utilization of services, adverse selection, new medical technology, cost shifting, state insurance taxes and fees, regulatory compliance, the aging of the population, and unhealthy lifestyles.”

In addition, Loussedes said, the new health reform law already contains numerous provisions where insurance rates are already subject to significant oversight and review.

In a note to members, CIAB officials said, “Such a move would inevitably add even greater controversy and polarization to the regulatory reform legislation.”

Most importantly, CIAB officials said, “regulating health insurance rates is simply irrelevant to the issues being debated in financial reform. Such a price-control regime is also substantively objectionable on many levels, not the least of which is that the health reform legislation is based on state-based exchanges, not a single national exchange.”