Insurance regulators support plan to undermine consumer rebates

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Dedicated to affordable, quality healthcare and coverage for all Americans.

By Consumers Union on Monday, November 28th, 2011

While millions of Americans spent last week focused on family, friends and Thanksgiving dinner, a behind-the-scenes group of state regulators voted in favor of a plan that could undermine billions in rebates due consumers from insurance companies.

The closely divided vote pitted insurance industry giants against families and small businesses who buy health insurance on their own. At issue was a key component of the much-maligned health reform law that will save consumers almost $2 billion in the coming year. The rule simply requires that insurers can’t spend more than 20% of our premiums on their profits and overhead.  If they spend more than that, they must rebate policyholders the difference.

By a vote of 26 to 20 (with 5 states abstaining and 3 not voting), the National Association of State Insurance Commissioners sent a resolution to Congress and federal regulators requesting that the new consumer protection be gutted through either an implementation delay, state waivers, or altering the calculation to allow more than 20% of our premiums to be spent on overhead– all bad deals for consumers.

California Insurance Commissioner Dave Jones, one of the 20 who stood up against insurers to protect consumers, said it best:

“I am very disappointed that the narrowly divided vote of Insurance Commissioners elevated politics over the sound, evidence-based decision making that is expected of us as insurance regulators,” said Commissioner Jones after the close vote. “Consumers are ill-served by the proposal to lower the percentage of premiums that insurers are now required to put into medical care versus profits and overhead.”

Now members of Congress will likely decide if they’ll follow this harmful path, or reject this proposal and maintain one of the new law’s most valuable consumer protections designed to harness rising insurance premiums.

Make sure your members know where you stand by taking action now.

 

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