The Myth of State Insurance Rate Regulations and the Need in Health Care Reform

When did you last contact your state insurance commissioner's office to contest a rate increase on your health insurance premiums. If you had that experience recently it probably was totally futile. You probably wondered why your taxes paid for the State Insurance Commissioner and staff if all they did was rubber stamp all insurance rates as acceptable regardless of the size or reason for the increase. My recent experience went as follows.

Last year we experience a 31% increase for one of our Medicare supplement premiums and that prompted a change of insurer and changing both of our supplement policies to non-age based. Both of us had lost my employer supplemental policies when the company dropped all retiree health benefits.This year I experienced a 9% premium increase and for that reason decided to send a letter of inquiry to my insurance company and the State Insurance Commissioner's office. The simple question was why a 9% increase? The insurance company replied by stating that the increase reflected the increase in payouts for all policy holders in Wisconsin who were covered with the same type of policy. No other explanation was given even though I requested back up information. A subsequent letter from the Insurance Commissioner's office simply said in formal words that increases are a way of life and that they had no power to limit premium increases. Follow up phone calls with the insurance company and the State Commissioner's office confirmed that fact and also verified that premium increases by my insurance company ranged from about 8% to 12% for the same types of policies in other states served by this company. None of the rate increases were subjected to any limitations imposed by so-called State Insurance Regulators in any of the states included.

My obvious question was what is the purpose of the State Insurance Commissioner if they have no influence over rates? If you find out please let me in on the secret. The purposes have little or nothing to do with limiting premium rate increases.

The underlying reason for this blog is to reveal to those of you who may not have considered the impotency of State Regulatory Insurance Commissioners to limit rate increases, and the necessity to include regulatory price control power in any health care reform legislation. Such regulatory power is unlikely to become part of the final Reconciliation of the Senate and House versions unless we the people demand that it be included. The Health Insurance Industry and Republican Party are vehemently opposed and will spend as much money as required lobbying against any regulations that could control the premium price increases that Health Insurance Companies decide. Without price regulations and meaningful price control enforcement, health care insurance premiums will continue to escalate, and we will all break the bank trying to pay for our health care. Speak out now and let your Congressional members hear your support for real health insurance cost containment by enforceable regulations. Interstate competition will not suffice without the power to regulate premium increases in all 50 states.