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Posts Tagged ‘Rate Increases’

Breaking: Obama To Propose Price Controls For Health Insurance Premiums Tomorrow

Sunday, February 21st, 2010

President Barack Obama Will Include Federal Price Controls in Tomorrow's Internet Release of New Obamacare Legislative Language

As the anticipation grows in DC regarding tomorrow’s release of Obama’s latest intra-Democratic compromise health care proposal, the NYT reports that the Obama Administration will include provisions that create a “new power” of the federal government to control the price of health insurance:

WASHINGTON — President Obama will propose on Monday 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’s legislation aims to bridge differences between the 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 on Thursday.

By focusing on the effort to tighten regulation of insurance costs, a new element not included in either the House or Senate bills, Mr. 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.

The timing of the leak to the NYT tonight appears designed to control the media narrative tomorrow, when Obama’s specific language will be released on the internet. Obama’s emphasis on being tough on insurance companies appears designed to paint the GOP as soft on insurance companies should the GOP continue to refuse to go along with Obama’s health care plans. Additionally, the price controls would take effect immediately, giving the Democrats something to point to in the short term should Obamacare pass as most individual benefits are not set to begin until 2013. Specifically, the price control system proposed by Obama would work as follows according to the NYT:

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

Officials said they envisioned the provision taking effect immediately after the health care bill is signed into law.

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, and 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 finance premium review and approval.

The new price control provisions will also provide the GOP with an opening to paint Obamacare as a big government takeover of the health care system, especially as they are to take effect immediately and potentially disrupt private insurance company operations and plans for the ongoing fiscal year 2010. Conversely, the large new increases in a small subset of non-employer obtained health care insurance in California have provided political fuel to those on the left who advocate strong federal price controls. However, even some Democratic Senators, such as Sen. Jeff Bingaman (D-N.M.), who participated in Democratic Senate Finance Committee Chairman Max Baucus’s bipartisan health care negotiations, reject health insurance price controls, notes the LA Times in September 2009:

But Democrats have shied away from regulating premiums in the face of charges from business leaders and Republicans that controlling what insurers charge would be meddling too much in the private sector.

As a result, while states have long supervised what companies charge for mandated automobile and homeowners insurance, the idea has been largely banished from the healthcare debate.

“That would be a very substantial additional intervention in the marketplace,” said Sen. Jeff Bingaman (D-N.M.), a member of a bipartisan group of lawmakers who worked with Senate Finance Committee Chairman Max Baucus (D-Mont.) on his healthcare bill. “I just don’t think the support would be there for that kind of a change.”

Another wildcard in the health care debate this week is the role of the nation’s governors, who are increasingly upset about being shut out of the intra-Democratic health care negotiations and desire “more of a voice” in the negotiations:

Leaders of the National Governors Association meeting in Washington on Sunday expressed frustration that that they had been largely shut out of negotiations over the future of the health care system, even though they would be responsible for carrying out many of the changes envisioned by federal officials. They said they want more of a voice in shaping those changes.

“It’s important that governors be at the table and bring our perspective to the debate,” said Gov. Jim Douglas of Vermont, a Republican who is chairman of the National Governors Association.

Mr. Douglas said governors were deeply involved in discussions with Congress and Mr. Obama on the economic stimulus law adopted early last year. But he said, “We have not had that kind of relationship in the current debate” on health care.

Gov. Phil Bredesen of Tennessee, a Democrat, said: “Governors have something unique to contribute. Washington, D.C., is full of think tanks, theoreticians and advocacy groups. Governors are the ones whose feet are on the ground. We have a sense of what will work and what won’t work. Our perspective is not the only one. But we can bring some practicality to this discussion.”

In what is sure to be an exciting week for those interested in health care reform, the addition of federal price controls into the mix is will spark renewed disputes between liberals and conservatives over whether increased government power is the answer for the issues facing America’s health care system.

UPDATE: Hotair and others follow CentristNet’s lead regarding Obama’s proposed price controls.

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