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Originally published February 21, 2010 at 10:45 PM | Page modified February 22, 2010 at 8:59 AM

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Obama to seek federal power over insurers

President Obama on Monday will propose giving the federal government new power to block excessive rate increases by health-insurance companies...

The New York Times

WASHINGTON — President Obama on Monday will propose giving the federal government new power to block excessive rate increases by health-insurance companies, as he rolls out comprehensive legislation to revamp the nation's health-care system, White House officials said.

The president attempts to bridge differences between bills adopted by the House and Senate late last year, and to frame his debate with Republicans over health policy at a televised "summit" meeting Thursday.

By focusing on the effort to tighten regulation of insurance costs, a new element not included in either the House or Senate bills, Obama is seizing on outrage over recent premium increases of up to 39 percent announced by Anthem Blue Cross of California and moving to portray the Democrats' health overhaul as a way to protect Americans from predatory insurers.

Congressional Republicans long have denounced the Democrats' legislation as a "government takeover" of health care. While they will likely resist any expansion of federal authority over existing state regulators, they will face a tough balancing act at the meeting with the president to avoid appearing as if they are willing to allow steep premium increases such as those by Anthem.

GOP leaders had not formally accepted the president's invitation, but Senate Republican leader Mitch McConnell of Kentucky said Sunday he would attend.

The president's new provision seemed to offer Republicans an opening for a new line of criticism — that Obama and Democrats are anticipating the possibility of hefty price increases for health insurance even after their big legislation is adopted.

The White House has held details of Obama's bill extremely tight, leaving even top Democrats in Congress anxiously awaiting the text to be released Monday. But administration officials said the proposal would incorporate legislation unveiled last week by Sen. Dianne Feinstein, D-Calif., in response to the Anthem increases.

Anthem, California's largest for-profit insurer, has announced premium increases for nearly 700,000 customers, citing the soaring costs of medical care and the effects of a weak economy in which many younger and healthier people are dropping insurance. The Obama administration has sought to portray the situation as a warning of what could happen to many more Americans if Congress does not act to overhaul the health system.

The president's proposal would grant the federal health and human services secretary new authority to review — and block — premium increases by private insurers, potentially superseding state insurance regulators. The bill would create a new Health Insurance Rate Authority, composed of health-industry experts, that would issue an annual report setting parameters for reasonable rate increases based on conditions in the market.

The legislation would call on the secretary of health and human services to work with state regulators to develop an annual review of rate increases. If increases are deemed "unjustified," the secretary or the state could block the increase, order the insurer to change it, or even issue a rebate to beneficiaries. States would be eligible for a portion of $250 million in grants to finance premium review and approval.

The new rate board would have seven members, including consumer representatives, an insurance-industry representative, a physician and other experts such as health economists and actuaries, the White House said. An annual report would offer guidance to the public and states on whether rate increases should be approved.

But it is unclear if the new powers or the rate board would have much long-term impact. The legislation ultimately seeks to sharply curtail the existing individual insurance market in which companies such as Anthem Blue Cross now sell policies.


Instead, such policies would be regulated heavily by the federal government and sold through new insurance exchanges, where consumers could choose policies that fit their needs best.

The president's bill, like the measures adopted by the House and Senate, is expected to require most Americans to obtain insurance, and would provide new federal subsidies to help moderate-income people afford to buy private coverage.

And though Americans have heard officials in both parties talk for nearly a year about "President Obama's health-care plan," the legislation unveiled Monday actually will be the first comprehensive proposal put forward by the White House.

Feinstein, in an interview Sunday night, pointed to the $12.2 billion in profits reaped by the five biggest private insurers in 2009. "When you look at the profits in '09," she said, "up 56 percent over the year before, you begin to understand that something is going on that is not in the interests of the American people."

Feinstein said only 25 states allow their insurance commissioners to regulate rates and that California is not one of them.

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