Holding health insurance companies accountable
By Consumers Union on Monday, January 30th, 2012
Keeping your health insurance costs down is one of our top priorities. Which is why we’ve been working both publicly and behind the scenes to make sure insurance companies adhere to the new national health care law that says they can’t spend more than 20 percent of your premium on their overhead, marketing or CEO salaries.
And with your help, we’ve been scoring some big victories!
Created to hold companies accountable for how they spend our money, the rule in the Affordable Care Act says if companies miss the mark, they must give customers rebates or lower premiums. The law required insurers to start meeting the new 20 percent standard on January 1, 2011. But to make sure the rule doesn’t leave us with fewer choices, Congress left room for states to gradually phase in the standard if the state can show it will cause too many companies to stop offering coverage to consumers who buy their own policies.
Naturally, some insurance companies pounced on that provision and lobbied state insurance departments to apply for delays, even when there was little to no evidence that the rule would cause insurers to leave the market. We fought back in those states with consumer voices and solid analyses.
In Florida, state officials tried to deny consumers an estimated $144 million in rebates or lower premiums over the next three years by delaying the effective date of the law until 2014. The state argued that the rule would make health insurers flee the market, rather than pay rebates. But consumers in that state have at least 20 insurance companies to choose from, and we argued that consumers don’t need an endless number of health insurance choices if they are of poor value.
Federal officials agreed, twice denying Florida’s unjustified attempt to put insurer profits ahead of consumers’ wallets.
In Texas, the state’s proposal to delay the rule would have meant the loss of an estimated $260 million in rebates to consumers. We argued that most residents are covered by companies that already meet the new requirement, and those that don’t are profitable enough to pay the rebates. Again, federal officials agreed and denied the state’s application.
And in North Carolina and Wisconsin, we’re fighting to keep residents’ rebates by urging federal officials to reject those state applications as well. We’ll be watching for those decisions during the next two months.
Seventeen states have asked for adjustments to the standard. So far, only six have been granted (Georgia, Iowa, Kentucky, Maine, Nevada, and New Hampshire). Nine states have been denied (Delaware, Indiana, Florida, Kansas, Louisiana, Michigan, North Dakota, Oklahoma, and Texas); and two are still under review (North Carolina and Wisconsin).
The state fights are just part of the battle. The industry continues to lobby Congress to weaken or undo the law. With your help, we’ll continue to fight every step of the way to make sure insurers are held accountable for how they spend our money – and if it’s a rip-off for consumers, that we get that money back!