[Congressional Record Volume 148, Number 137 (Thursday, October 17, 2002)]
[Extensions of Remarks]
[Page E1917]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 HEALTH INSURANCE FAIRNESS ACT OF 2002

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                           HON. EARL POMEROY

                            of north dakota

                    in the house of representatives

                      Wednesday, October 16, 2002

  Mr. POMEROY. Mr. Speaker, I am pleased to introduce the ``Health 
Insurance Fairness Act of 2002.'' Today, Senator Bob Graham and I are 
introducing this legislation to prohibit the practice of reunderwriting 
health insurance at renewal, to protect some 16 million Americans who 
rely on individual health insurance policies.
  You can easily understand what reunderwriting is by thinking about 
your car insurance. If you have a couple of accidents, or get a couple 
of tickets, your rates go up. Similarly, reunderwriting at renewal of 
health insurance forces people who become ill to accept substantial 
premium increases or face losing their coverage. The difference is, 
people have virtually no control over whether they get cancer, or 
develop asthma, or if their child is diagnosed with diabetes.
  Most insurers evaluate an individual's medical history only when he 
or she applies for coverage. Recently, however, some insurers have 
adopted the practice of reviewing customers' health status annually and 
adjusting premiums according to what kind of year the individual had. 
If a person has developed a costly medical condition or has filed a 
large number of claims, the insurer raises the individual's premium.
  As a former state insurance commissioner, I believe that this 
practice, left unchecked, will make it more difficult, if not 
impossible, for people who have paid insurance premiums for years to 
maintain coverage when they need it the most. In my view, 
reunderwriting undermines the risk pools that are necessary to make 
health insurance possible. Balanced risk pools are essential to 
affordable, accessible coverage for the greatest number of Americans 
because they balance the risks of the healthy with the less healthy. 
Diverse risk pools also provide stability to the insurance industry by 
spreading liability. If we allow a system that creates incentives for 
``cherry picking'' the healthy, who will insure the unhealthy when they 
can no longer afford coverage?
  Reunderwriting at renewal also violates the spirit of health 
insurance guaranteed renewability requirements under state and federal 
law. In the 1990's, the National Association of Insurance Commissioners 
(NAIC) developed model laws to prohibit insurance companies from 
canceling policies once an individual became sick. In 1997, the Health 
Insurance Portability and Accountability Act (HIPAA) applied this 
requirement to all health insurance policies subject to HIPAA. 
Reunderwriting at renewal attempts to circumvent these important 
consumer protections.
  Mr. Speaker, the Health Insurance Fairness Act I am introducing today 
would make health insurance more secure. The bill clarifies that 
guaranteed renewal of health insurance in current law means that 
insurers are prohibited from targeting individuals for premium 
increases based on their health in the preceding year.
  I realize the late hour of this session of Congress, but I think it 
is important to introduce this bill now to send a message to those who 
are monitoring this process with an interest in developing this type of 
business line. Reunderwriting at renewal violates the spirit of 
consumer protections for health insurance and Congress should act to 
protect consumers from this type of business practice.

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