[Congressional Record Volume 156, Number 30 (Thursday, March 4, 2010)]
[Senate]
[Pages S1172-S1175]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mrs. FEINSTEIN (for herself, Mrs. Boxer, Mr. Whitehouse, Mr. 
        Reed, and Mr. Sanders):
  S. 3078. A bill to provide for the establishment of a Health 
Insurance Rate Authority to establish limits on premium rating, and for 
other purposes; to the Committee on Health, Education, Labor, and 
Pensions.
  Mrs. FEINSTEIN. Mr. President, I rise to introduce legislation to 
create a Health Insurance Rate Authority and rate review process to 
protect American consumers from unfair health insurance rate increases.
  This legislation is based on an amendment I filed during the health 
reform debate. While it was not included in the reform legislation that 
passed the Senate, I strongly believe consumers need additional 
protections from insurance company abuses now.
  I am pleased that President Obama has included it in his health 
reform proposal, and I look forward to continuing to work with the 
administration to see that this bill becomes law.
  This bill ensures that all American consumers are protected by a rate 
review process, not just those in states with aggressive laws.
  This legislation requires companies to submit justifications for 
unreasonable increases in premiums, using a process that will be 
established by the Secretary, in conjunction with States.
  The bill gives the Secretary of HHS authority to deny or modify 
premium increases or other rate increases, like deductibles, that are 
found to be unjustified. State Insurance Commissioners will retain this 
power in states in which they have sufficient authority and capability.
  To help the Secretary with this process, the legislation establishes 
a Health Insurance Rate Authority as an advisory body for all the 
Secretary's rate review responsibilities.
  Health insurance companies continue to demonstrate their willingness 
to slap consumers with astronomical increases in their health insurance 
rates.
  Anthem Blue Cross has notified thousands of Californians that they 
will face rate increases of as much as 39 percent. Meanwhile, 
WellPoint, the corporate parent of Anthem Blue Cross, earned a $4.7 
billion profit in 2009.
  I find this unbelievable. Imagine the typical family, or individual, 
trying to find the money to pay 39 percent more for health care 
coverage. Especially during these difficult economic times, with so 
much uncertainty. Meanwhile, the health insurance company is doing 
better than ever.
  I would like to share a few of the letters and comments I have 
received from Californians that vividly describe what these increases 
mean to them.
  Arthur Hirsch, 63, and his wife Eileen have had Blue Cross for 30 
years. They live in Laguna Beach and own a small business. They 
recently received notice that their monthly premiums would increase 
from $787 per month to $1,035 per month. Arthur said he was told that 
he could raise his annual deductible to $5,000 or higher to keep the 
premium increases down. But he said he fears he is stuck with the 
policy. He said: ``I can't leave my assets and my family uncovered. If 
something happens . . . well that's what insurance is about.''
  A Monterey, CA couple recently found out their premiums with Anthem

[[Page S1173]]

Blue Cross will increase 36 percent--from $734 a month to $998 a month. 
They own an antique print business. The economy has hurt sales--their 
2008 gross household income was $42,000, and they don't expect their 
income will increase much in 2009 or 2010. More than 25 percent of 
their household income goes toward premiums--far more than their 
mortgage. They are wondering if they should go into debt, use the 
equity in their home or withdraw money from their retirement accounts 
to pay for the rate hikes. Because of pre-existing conditions, the 
woman is a breast cancer survivor, they don't believe they can get a 
more affordable policy elsewhere.
  A family of four from Pacific Palisades, California, has a $5,000 per 
person deductible. They pay $917 per month premiums for the family--
$11,000 per year. Their insurance plus out of pocket expenses were more 
than 25 percent of the family's gross income for each of the past 2 
years and no member of the family ever satisfied the deductible. They 
just received notice that their premium will go up 38 percent, to 
$1,263 per month. Anthem offered this family another deal: increase 
premium payments just 10 percent to $1,011 a month if the family agrees 
to an increased deductible of $7,500 per person. The father in the 
family hasn't had a checkup in 6 years. He's 56 years old.
  This is not how our system should function.
  In some States, insurance commissioners have the authority to review 
health insurance rates and increases, and block the rates that are 
found to be unjustified. According to a 2008 Families USA report, 33 
States have some form of a prior approval process for premium 
increases.
  The same report describes several notable successes among states that 
use this process, including: Regulators in North Dakota were able to 
reduce 37 percent of the proposed rate increases filed by insurers.
  Maryland used their State laws to block a 46 percent premium increase 
after a company charged artificially low rates for 2 years. The 
decision was upheld in court.
  New Hampshire regulators were able to reduce a proposed 100 percent 
rate increase to 12.5 percent.
  But in other States, including California, insurance commissioners do 
not have this ability. Instead, my State's insurance commissioner has 
had to ask Anthem/Blue Cross to delay its proposed increase in 
premiums. He has no authority to order this delay.
  Some States have laws like this on the books, but do not have 
sufficient resources to review all the rate changes that insurance 
companies propose.
  Consumers deserve full protection from unfair rate increases, no 
matter where they live.
  This legislation ensures that all Americans have some level of basic 
protection. The bill is based in part on a provision included in the 
Senate's version of health reform legislation, which required insurance 
companies to submit justifications and explain increases in premiums. 
They must submit these justifications to the Secretary of Health and 
Human Services, and they must make these justifications available on 
their website.
  The bill asks the National Association of Insurance Commissioners to 
produce a report, detailing the rate review laws and capabilities in 
all 50 States. The Secretary of HHS will then use these findings to 
determine which States have the authority and capability to undertake 
sufficient rate reviews to protect consumers.
  In States where Insurance Commissioners have authority to review 
rates, they will continue to do so.
  In States without sufficient authority or resources, the Secretary of 
HHS will review rates, and take any appropriate action to deny unfair 
requests.
  This could mean blocking unjustified rate increases, or requiring 
rebates, if an unfair increase is already in effect.
  This will provide all American consumers with another layer of 
protection from an unfair premium increase.
  The amendment would also require the Secretary of Health and Human 
Services to establish a Health Insurance Rate Authority as part of the 
process in the bill that enables her to monitor premium costs.
  The Rate Authority would advise the Secretary on insurance rate 
review and would be composed of seven officials that represent the full 
scope of the health care system including: at least two consumers; at 
least one medical professional; and one representative of the medical 
insurance industry.
  The remaining members would be experts in health economics, actuarial 
science, or other sectors of the health care system.
  The Rate Authority will also issue an annual report, providing 
American consumers with basic information about how insurance companies 
are behaving in the market. It will examine premium increases by State, 
as well as medical loss ratios, reserves and solvency of companies, and 
other relevant behaviors.
  This data will give consumers better information, enabling them to 
make better choices and avoid purchasing plans from companies that do 
not provide them the best value for their dollar.
  This concern about premium increases stems from the fact that we are 
the only industrialized nation that relies heavily on a for-profit 
medical insurance industry to provide basic health care. I believe, 
fundamentally, that all medical insurance should be not for profit.
  The industry is focused on profits, not patients. It is heavily 
concentrated, leaving consumers with few alternatives when their 
premiums do increase.
  As of 2007, just two carriers--WellPoint and UnitedHealth Group--had 
gained control of 36 percent of the national market for commercial 
health insurance.
  Since 1998, there have been more than 400 mergers of health insurance 
companies, as larger carriers have purchased, absorbed, and enveloped 
smaller competitors.
  In 2004 and 2005 alone, this industry had 28 mergers, valued at more 
than $53 billion. That is more merger activity in health insurance than 
in the 8 previous years combined.
  Today, according to a study by the American Medical Association, more 
than 94 percent of American health insurance markets are highly 
concentrated, as characterized by U.S. Department of Justice 
guidelines. This means these companies could raise premiums or reduce 
benefits with little fear that consumers will end their contracts and 
move to a more competitive carrier.
  In my State of California just two companies, WellPoint and Kaiser 
Permanente, control more than 58 percent of the market. In Los Angeles, 
the top two carriers controlled 62 percent of the market as of 2008.
  Record levels of market concentration have helped generate a record 
level of profit increases.
  Between 2000 and 2007, profits at 10 of the largest publicly-traded 
health insurance companies soared 428 percent--from $2.4 billion in 
2000 to $12.9 billion in 2007.
  The CEOs at these companies took in record earnings. In 2007, these 
10 CEOs made a combined $118.6 million.
  The CEO of CIGNA took home $25.8 million.
  The CEO of Aetna took home $23 million.
  The CEO of UnitedHealth took home $13.2 million and the CEO of 
WellPoint took home $9.1 million.
  Even last year, a time of enormous economic distress for average 
Americans, was a good year for the health insurance industry. According 
to Health Care for America Now!, the 5 largest health insurers--
WellPoint, United Health, Humana, Cigna, Aetna--saw profits increase 56 
percent from 2008 to 2009, from $7.7 billion to $12.1 billion. Only 
Aetna saw their profits decrease.
  Yet we see insurance companies like Anthem/Blue Cross, owned by Well 
Point, increasing consumer premiums.
  Frankly, I would go further than this legislation if I could: I 
believe the health insurance industry should be non-profit. There is no 
reason that any company or shareholder should make a penny off of basic 
health care coverage for our citizens.
  But we do have a system that heavily relies on for-profit insurance 
companies. Regardless of the outcome of the broader debate on health 
care reform, that is unlikely to change.
  So this bill becomes very necessary. Premiums are increasing every 
day, and people in many states have no recourse, and no way to know if 
a particular increase is unfair.

[[Page S1174]]

  This cannot continue. I urge my colleagues to join me in supporting 
this legislation.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3078

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Health Insurance Rate 
     Authority Act of 2010''.

     SEC. 2. ENSURING THAT CONSUMERS GET VALUE FOR THEIR DOLLARS.

       (a) In General.--Part C of title XXVII of the Public Health 
     Service Act (42 U.S.C. 300gg-91 et seq.) is amended by adding 
     at the end the following:

     ``SEC. 2793. ENSURING THAT CONSUMERS GET VALUE FOR THEIR 
                   DOLLARS.

       ``(a) Initial Rate Review Process.--
       ``(1) In general.--
       ``(A) Establishment.--The Secretary, in conjunction with 
     States, shall establish a uniform process for the review, 
     beginning with the 2011 plan year, of potentially 
     unreasonable increases in rates for health insurance 
     coverage, which shall include premiums.
       ``(B) Electronic reporting.--The process established under 
     subparagraph (A) shall include an electronic reporting system 
     established by the Secretary through which health insurance 
     issuers shall--
       ``(i) report to the Secretary and State insurance 
     commissioners the information requested by the Secretary 
     pursuant to this subsection; and
       ``(ii) submit data to the uniform data collection system in 
     accordance with paragraph (6)(A).
       ``(C) Authority of states.--Nothing in subparagraph (A) or 
     (B) shall be construed to prohibit a State from imposing 
     additional requirements on health insurance issuers with 
     respect to increases in rates for health insurance coverage, 
     including with respect to reporting information to a State.
       ``(2) Justification and disclosure.--The process 
     established under paragraph (1) shall require health 
     insurance issuers to submit to the Secretary and the relevant 
     State a justification for a potentially unreasonable rate 
     increase prior to the implementation of the increase. Such 
     issuers shall prominently post such information on their 
     Internet websites. The Secretary shall ensure the public 
     disclosure of information on such increases and 
     justifications for all health insurance issuers.
       ``(3) Health insurance rate authority.--
       ``(A) In general.--The Secretary shall establish a Health 
     Insurance Rate Authority (referred to in this paragraph as 
     the `Authority') to be composed of 7 members to be appointed 
     by the Secretary, of which--
       ``(i) at least 2 members shall be a consumer advocate with 
     expertise in the insurance industry;
       ``(ii) at least 1 member shall be an individual who is a 
     medical professional;
       ``(iii) at least 1 member shall be a representative of 
     health insurance issuers; and
       ``(iv) such remaining members shall be individuals who are 
     recognized for their expertise in health finance and 
     economics, actuarial science, health facility management, 
     health plans and integrated delivery systems, reimbursement 
     of health facilities, and other related fields, who provide 
     broad geographic representation and a balance between urban 
     and rural members.
       ``(B) Role.--In addition to the other duties of the 
     Authority set forth in this subsection, the Authority shall 
     advise and make recommendations to the Secretary concerning 
     the Secretary's duties under this subsection.
       ``(4) Corrective action for unreasonable rate increases.--
       ``(A) In general.--Pursuant to the procedures set forth in 
     this paragraph, the Secretary or the relevant State insurance 
     commissioner shall--
       ``(i) in accordance with the process established under 
     paragraph (1), review potentially unreasonable increases in 
     rates and determine whether such increases are unreasonable; 
     and
       ``(ii) take action to ensure that any rate increase found 
     to be unreasonable under clause (i) is corrected, through 
     mechanisms including--

       ``(I) denial of the rate increase;
       ``(II) modification of the rate increase;
       ``(III) ordering rebates to consumers; or
       ``(IV) any other actions that correct for the unreasonable 
     increase.

       ``(B) Required report; definition.--The Secretary shall 
     ensure that, not later than 6 months after the date of 
     enactment of this section, the National Association of 
     Insurance Commissioners (referred to in this section as the 
     `Association'), in conjunction with States, or other 
     appropriate body, will provide to the Secretary and the 
     Authority--
       ``(i) a report on--

       ``(I) State authority to review rates and take corrective 
     action in each insurance market, and methodologies used in 
     such reviews;
       ``(II) rating requests received by the State in the 
     previous 12 months and subsequent actions taken by States to 
     approve, deny, or modify such requests; and
       ``(III) justifications by insurance issuers for rate 
     requests; and

       ``(ii)(I) a recommended definition of unreasonable rate 
     increase, which shall consider a lack of actuarial 
     justification for such increase; and
       ``(II) other recommended definitions for the purposes of 
     carrying out this subsection.
       ``(C) Determination of who conducts reviews for each 
     state.--Using the report submitted pursuant to subparagraph 
     (B), the Secretary shall determine not later than 1 year 
     after the date of enactment of this section and periodically 
     thereafter--
       ``(i) for which States the State insurance commissioner 
     shall undertake the actions described in subparagraph (A)--

       ``(I) based on the Secretary's determination that the State 
     has sufficient authority and capability to deny rates, modify 
     rates, provide rebates, or take other corrective actions; and
       ``(II) as a condition of receiving a grant under subsection 
     (c)(1); and

       ``(ii) for which States the Secretary shall undertake the 
     actions described in subparagraph (A), in consultation with 
     the relevant State insurance commissioner, based on the 
     Secretary's determination that such States lack the authority 
     and capability described in clause (i).
       ``(D) Transition period.--Until the Secretary makes the 
     determinations described in subparagraph (C), the relevant 
     State insurance commissioner shall, as a condition of 
     receiving a grant under subsection (c)(1), carry out the 
     actions described in subparagraph (A) to the extent 
     permissible under State law.
       ``(5) Prioritizing potentially unreasonable rate increases 
     for review.--The Secretary or the relevant State insurance 
     commissioner may prioritize--
       ``(A) rate increases that will impact large numbers of 
     consumers;
       ``(B) rate reviews requested from States, if applicable; 
     and
       ``(C) rate reviews in the individual and small group 
     markets.
       ``(6) Annual report.--
       ``(A) Uniform data collection system.--The Secretary, in 
     consultation with the Association and the Authority, shall 
     develop, and may contract with the Association to operate, a 
     uniform data collection system for new and increased rate 
     information, which shall include information on rates, 
     medical loss ratios, consumer complaints, solvency, reserves, 
     and any other relevant factors of market conduct.
       ``(B) Preparation of annual report.--Using the data 
     obtained in accordance with subparagraph (A), the Authority 
     shall annually produce a single, aggregate report on 
     insurance market behavior, which includes at least State-by-
     State information on rate increases from one year to the 
     next, including by health insurance issuer and by market and 
     including medical trends, benefit changes, and relevant 
     demographic changes.
       ``(C) Distribution.--The Authority shall share the annual 
     report described in subparagraph (B) with States, and include 
     such report in the information disclosed to the public.
       ``(b) Continuing Rate Review Process.--As a condition of 
     receiving a grant under subsection (c)(1), a State, through 
     the applicable State insurance commissioner, shall provide 
     the Secretary with information about trends in rate increases 
     in health insurance coverage in premium rating areas in the 
     State, in accordance with the uniform data collection system 
     established under subsection (a)(6)(A).
       ``(c) Grants in Support of Process.--
       ``(1) Rate review grants.--The Secretary shall carry out a 
     program to award grants to States beginning with fiscal year 
     2010 to assist such States in carrying out subsection (a), 
     including--
       ``(A) in reviewing and, if appropriate under State law, 
     approving or taking corrective action with respect to rate 
     increases for health insurance coverage; and
       ``(B) in providing information to the Secretary under 
     subsection (b).
       ``(2) Funding.--
       ``(A) In general.--There is authorized to be appropriated 
     to the Secretary $250,000,000, to be available for 
     expenditure for grants under paragraph (1).
       ``(B) Allocation.--The Secretary shall establish a formula 
     for determining the amount of any grant to a State under this 
     subsection. Under such formula--
       ``(i) the Secretary shall consider the number of plans of 
     health insurance coverage offered in each State and the 
     population of the State; and
       ``(ii) no State qualifying for a grant under paragraph (1) 
     shall receive more than $5,000,000 for a grant year.
       ``(d) Authorization of Appropriations.--In addition to the 
     amount authorized under subsection (c)(2), there are 
     authorized to be appropriated to carry out this section 
     $5,000,000 for fiscal year 2010 and such sums as may be 
     necessary for each subsequent fiscal year.''.
       (b) Enforcement.--Title XXVII of the Public Health Service 
     Act (42 U.S.C. 300gg et seq.) is amended--
       (1) in section 2722--
       (A) in subsection (a)--
       (i) in paragraph (1), by inserting ``and section 2793'' 
     after ``this part''; and
       (ii) in paragraph (2), by inserting ``or section 2793'' 
     after ``this part''; and
       (B) in subsection (b)--
       (i) in paragraph (1), by inserting ``and section 2793'' 
     after ``this part''; and

[[Page S1175]]

       (ii) in paragraph (2), by inserting ``or section 2793'' 
     after ``this part'' each place such term appears; and
       (2) in section 2761--
       (A) in subsection (a)--
       (i) in paragraph (1), by inserting ``and section 2793'' 
     after ``this part''; and
       (ii) in paragraph (2)--

       (I) by inserting ``or section 2793'' after ``set forth in 
     this part''; and
       (II) by inserting ``and section 2793'' after ``the 
     requirements of this part''; and

       (B) in subsection (b)--
       (i) by inserting ``and section 2793'' after ``this part''; 
     and
       (ii) by inserting ``and section 2793'' after ``part A''.
       (c) Effective Date.--The amendment made by this section 
     shall take effect on the date of enactment of this Act.
                                 ______