[Congressional Record Volume 157, Number 10 (Tuesday, January 25, 2011)]
[Senate]
[Pages S204-S206]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. REID (for Mrs. Feinstein (for herself, Mr. Inouye, Mrs. 
        Boxer, Mr. Sanders, Mr. Whitehouse, Mr. Casey, and Mr. 
        Lautenberg)):
  S. 137. A bill to amend the Public Health Service Act to provide 
protections for consumers against excessive, unjustified, or unfairly 
discriminatory increases in premium rates; to the Committee on Health, 
Education, Labor, and Pensions.
  Mrs. FEINSTEIN. Mr. President, in passing the Patient Protection and 
Affordable Care Act, PPACA, on March 23, 2010, the 111th Congress made 
great strides towards protecting consumers from egregious health 
insurance company practices. However, despite the passage of this 
historic legislation, the urgent need to protect Americans from unfair 
health insurance rate increases remains.
  Health insurance premiums have been spiraling upwards nationally at 
out-of-control rates--10, 20, 30 percent every year--all while big 
national insurance companies enjoy increasing profits.
  Without further legislative action, health insurance companies will 
continue to do what they have done for far too long: put their profits 
ahead of people.
  Over the past decade, family health insurance premiums have more than 
doubled, growing a shocking 130 percent, while workers' hourly earnings 
rose by only 38 percent, and inflation rose just 29 percent.
  From 2000-2008, individuals in the employer-sponsored market saw 
premiums increase an average of 90 percent.
  The cost of health insurance continues to outpace income and 
inflation for other goods and services, and these rapidly escalating 
costs strain businesses, families, and individuals.
  In 2009, 57 percent of people attempting to purchase insurance in the 
individual market found it difficult or impossible to afford coverage.
  All the while, in the third quarter of 2010, the six-largest 
investor-owned health insurance companies (Aetna, Coventry Health, 
United Health, Humana, WellPoint, and Cigna) saw a 22 percent increase 
in combined net income, putting them on pace to break their own profit 
record.
  The problem is that the health reform law did not go far enough to 
control these unfair premium increases, it leaves a loophole.
  Simply stated, there is no federal authority to do anything about 
these rate increases, even if they are unfair.
  We need to close this loophole.
  This is why today I am introducing, with Senators Boxer and Inouye, 
the Health Insurance Rate Review Act of 2011. Representative Schakowsky 
is introducing companion legislation in the House of Representatives.
  This legislation creates a federal fallback rate review process, and 
grants regulatory authority to block or modify rate increases that are 
excessive, unjustified, or unfairly discriminatory.
  This legislation is a simple, common-sense solution: for States where 
the insurance commissioner does not have or

[[Page S205]]

use authority to block unfair rate increases, the Secretary of Health 
and Human Services can do so.
  On March 4, 2010, I introduced similar legislation to what I am 
introducing today. I worked with the Administration and the Finance 
Committee in putting it together, and with Representative Schakowsky.
  President Obama included it in his health reform proposal, but 
unfortunately, it did not meet the criteria for reconciliation.
  The time has come now to take action.
  This legislation is necessary in order to protect consumers from the 
egregious abuses of insurance companies, especially before the majority 
of the consumer protections included in health reform are fully in 
place in 2014.
  It is disturbing that year after year, health insurance premiums 
spiral out control, all while insurance companies enjoy increasing 
profits.
  Insurance premiums make up a higher percentage of household income 
than ever before, meaning that more and more families have to choose 
between health care and daily living expenses, saving for retirement, 
and education.
  This is unacceptable, and more must be done to protect consumers.
  Everyone by now is familiar with the increases that Anthem/Blue 
Cross, a subsidiary of WellPoint, was set to impose--as much as 39 
percent--for 800,000 Californians.
  It turns out that Anthem Blue Cross used flawed data to calculate 
health insurance premium increases to hundreds of thousands of 
policyholders in California, resulting in increases that were larger 
than necessary.
  According to an independent analysis, the 25 percent average increase 
proposed by Anthem should have only been 15.2 percent.
  What is most disturbing is that Anthem's case is not an aberration. 
Far from it.
  This is not a problem unique to California. In the spring of 2010, 
health insurance companies pursued rate hikes in a number of States: as 
much as 60 percent in Illinois; 72 percent in Georgia; 50 percent in 
New Jersey; and 40 percent in Virginia, to name a few.
  The White House reports that premium rates have been rising across 
the Nation, with substantial geographic variation.
  For employer-sponsored family coverage, premiums increased 88 percent 
in Michigan over the past decade compared to a 145 percent increase in 
Alaska.
  A report by the Center for American Progress Action Fund found that 
this summer, WellPoint pursued double digit increases in the individual 
market for 10 other States: Colorado, Connecticut, Georgia, Indiana, 
Maine, Nevada, New Hampshire, New York, Virginia, and Wisconsin.
  The reporting requirements in the health reform law will improve the 
information available, but right now, comprehensive data on the premium 
increases insurers are imposing does not exist.
  In 2009, despite the worst economic downturn since the Great 
Depression, the five largest for-profit health insurance companies, 
WellPoint Inc., United Health Group Inc., Aetna Inc., Humana Inc., and 
Cigna Corp., set a full-year profit record. These companies saw a 56 
percent increase in profits from 2008 to 2009, from $7.7 billion to 
$12.1 billion.
  Furthermore, when many Americans were experiencing double-digit 
premium increases in 2009, high unemployment, and an average wage 
growth of only 2 percent, insurance CEOs gave themselves a 167 percent 
raise.
  CEO pay for the 10 largest for-profit health insurance companies was 
$228.1 million in 2009, up from $85.5 million in 2008.
  This doesn't even include the tens of millions more dollars in 
exercised stock options, and means that these CEOs raked in nearly $1 
billion in total compensation.
  In the first three months of 2010, the five largest for-profit health 
insurance companies, WellPoint Inc., United Health Group Inc., Aetna 
Inc., Humana Inc., and Cigna Corp., recorded a combined net income of 
$3.2 billion--a 31 percent jump over the same period in 2009.
  Meanwhile, large insurance companies now insure 2.8 million fewer 
Americans than they did on December 31, 2008. An estimated 59.1 million 
Americans were uninsured in the first quarter of 2010.
  The California HealthCare Foundation reported that 6.8 million 
California residents lack health coverage.
  That is 20 percent of the State's residents who are not able to 
afford health insurance.
  All the while, insurance companies have been reducing the amount they 
spend on actual health care. As profits and CEO pay increased, the 
amount of money insurers spent on medical care went down.
  The top six insurers drove down the portion of premiums spent on 
medical care. For example, the share of premium dollars that CIGNA 
spent on medical care decreased 6.4 percent in the second quarter of 
2010 compared to the prior year, and Humana's decreased 7.4 percent.
  Now, because of legislation in the health reform law, insurance 
companies have to spend 80-85 percent of premiums on medical care and 
quality improvement services, not on profits.
  This will go a long way to keeping insurance company greed in check, 
but we need to go farther.
  Clearly without additional legislative requirements, health insurance 
companies are not going to change.
  The Department of Health and Human Services recently published 
proposed rules defining the rate review process. These regulations are 
a first step towards protecting consumers and keeping insurers in 
check.
  But they fall short of creating a strong rate review system, and rely 
too heavily on the notion that public disclosure of rates will cause 
insurance companies to change their behavior.
  The regulations do not grant explicit regulatory authority--either 
State or Federal--to deny, modify, or block rate increases that are 
excessive, unjustified, or unfairly discriminatory.
  The health reform law requires insurance companies to provide 
justification for unreasonable premium increases to the Secretary of 
Health and Human Services and post them on their Web sites.
  The regulations subject rate increases of 10 percent or greater to 
additional scrutiny and review, but the State-specific thresholds in 
2012 could sanction increases higher than 10 percent.
  Transparency and increased scrutiny are steps forward, but there is 
still this loophole where there is no authority to block or modify even 
excessive, unjustified, and unfairly discriminatory increases.
  This is why I am again introducing my rate review legislation, which 
will grant this authority.
  I believe there needs to be a Federal fallback in States that lack 
the legal authority, capacity, or resources to conduct strong rate 
review.
  This legislation gives the Secretary of Health and Human Services the 
authority to block premium or other rate increases that are excessive, 
unjustified, or unfairly discriminatory.
  In some States, insurance commissioners already have that authority, 
and that is fine. The bill doesn't touch them.
  In Maine, for example, the State superintendent of insurance was able 
to block Anthem's proposed 18.5-percent increase last year. She 
approved only a 10.9-percent increase.
  In at least 17 States, including my own--California--companies are 
not required to receive prior approval for rate increases before they 
take effect.
  In these States, the Secretary would review potentially excessive, 
unjustified, or unfairly discriminatory rate increases and take 
corrective action. This could include blocking an increase, providing 
rebates to consumers, or adjusting an increase.
  Under this proposal, the Secretary would work with the National 
Association of Insurance Commissioners to implement the rate review 
process. States already doing this work will continue to do so unabated 
and unfettered. The legislation would not affect them.
  However, for the consumers in the other 17 States with no authority, 
such as California, protection from unfair rate hikes would be 
provided.
  Given the variation in State rate review authority and process, I 
think this proposal strikes the right balance.
  There is no need for involvement in States with insurance 
commissioners that are able to protect consumers. So the legislation I 
am introducing simply

[[Page S206]]

provides Federal protection for consumers who are currently at the 
mercy of large health insurance companies whose top priority is their 
bottom line.
  This legislation is particularly important given a recent report by 
the Kaiser Family Foundation showing that many States lack the capacity 
and resources to conduct adequate rate review, regardless of the 
State's statutory authority to review rates.
  I strongly believe that we need to take action on this. The health 
reform law made great strides towards holding companies and 
shareholders accountable for providing health care at a reasonable 
rate.
  However, there is this loophole.
  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.
  There needs to be a Federal fallback in States that lack the legal 
authority, capacity, or resources to conduct strong rate review. In 
States where the Insurance Commissioner is not equipped to review, 
modify, and block unreasonable rates, my legislation would grant the 
Secretary of Health and Human Services the authority to do so.
  I urge my colleagues to join me in supporting this legislation, the 
Health Insurance Rate Review Act of 2011, which will close this 
loophole.
  I look forward to working with my colleagues on this important issue.
  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. 137

       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 Review 
     Act''.

     SEC. 2. PROTECTION OF CONSUMERS FROM EXCESSIVE, UNJUSTIFIED, 
                   OR UNFAIRLY DISCRIMINATORY RATES.

       (a) Protection From Excessive, Unjustified, or Unfairly 
     Discriminatory Rates.--The first section 2794 of the Public 
     Health Service Act (42 U.S.C. 300gg-94), as added by section 
     1003 of the Patient Protection and Affordable Care Act 
     (Public Law 111-148), is amended by adding at the end the 
     following new subsection:
       ``(e) Protection From Excessive, Unjustified, or Unfairly 
     Discriminatory Rates.--
       ``(1) Authority of states.--Nothing in this section shall 
     be construed to prohibit a State from imposing requirements 
     (including requirements relating to rate review standards and 
     procedures and information reporting) on health insurance 
     issuers with respect to rates that are in addition to the 
     requirements of this section and are more protective of 
     consumers than such requirements.
       ``(2) Consultation in rate review process.--In carrying out 
     this section, the Secretary shall consult with the National 
     Association of Insurance Commissioners and consumer groups.
       ``(3) Determination of who conducts reviews for each 
     state.--The Secretary shall determine, after the date of 
     enactment of this section and periodically thereafter, the 
     following:
       ``(A) In which States the State insurance commissioner or 
     relevant State regulator shall undertake the corrective 
     actions under paragraph (4), as a condition of the State 
     receiving the grant in subsection (c), based on the 
     Secretary's determination that the State is adequately 
     prepared to undertake and is adequately undertaking such 
     actions.
       ``(B) In which States the Secretary shall undertake the 
     corrective actions under paragraph (4), in cooperation with 
     the relevant State insurance commissioner or State regulator, 
     based on the Secretary's determination that the State is not 
     adequately prepared to undertake or is not adequately 
     undertaking such actions.
       ``(4) Corrective action for excessive, unjustified, or 
     unfairly discriminatory rates.--In accordance with the 
     process established under this section, the Secretary or the 
     relevant State insurance commissioner or State regulator 
     shall take corrective actions to ensure that any excessive, 
     unjustified, or unfairly discriminatory rates are corrected 
     prior to implementation, or as soon as possible thereafter, 
     through mechanisms such as--
       ``(A) denying rates;
       ``(B) modifying rates; or
       ``(C) requiring rebates to consumers.''.
       (b) Clarification of Regulatory Authority.--Such section is 
     further amended--
       (1) in subsection (a)--
       (A) in the heading, by striking ``Premium'' and inserting 
     ``Rate'';
       (B) in paragraph (1), by striking ``unreasonable increases 
     in premiums'' and inserting ``potentially excessive, 
     unjustified, or unfairly discriminatory rates, including 
     premiums,''; and
       (C) in paragraph (2)--
       (i) by striking ``an unreasonable premium increase'' and 
     inserting ``a potentially excessive, unjustified, or unfairly 
     discriminatory rate'';
       (ii) by striking ``the increase'' and inserting ``the 
     rate''; and
       (iii) by striking ``such increases'' and inserting ``such 
     rates'';
       (2) in subsection (b)--
       (A) by striking ``premium increases'' each place it appears 
     and inserting ``rates''; and
       (B) in paragraph (2)(B), by striking ``premium'' and 
     inserting ``rate''; and
       (3) in subsection (c)(1)--
       (A) in the heading, by striking ``Premium'' and inserting 
     ``Rate'';
       (B) by inserting ``that satisfy the condition under 
     subsection (e)(3)(A)'' after ``award grants to States''; and
       (C) in subparagraph (A), by striking ``premium increases'' 
     and inserting ``rates''.
       (c) Conforming Amendment.--Title XXVII of the Public Health 
     Service Act (42 U.S.C. 300gg et seq.) is amended--
       (1) in section 2723 (42 U.S.C. 300gg-22), as redesignated 
     by the Patient Protection and Affordable Care Act--
       (A) in subsection (a)--
       (i) in paragraph (1), by inserting ``and section 2794'' 
     after ``this part''; and
       (ii) in paragraph (2), by inserting ``or section 2794'' 
     after ``this part''; and
       (B) in subsection (b)--
       (i) in paragraph (1), by inserting ``and section 2794'' 
     after ``this part''; and
       (ii) in paragraph (2)--

       (I) in subparagraph (A), by inserting ``or section 2794 
     that is'' after ``this part'' ; and
       (II) in subparagraph (C)(ii), by inserting ``or section 
     2794'' after ``this part''; and

       (2) in section 2761 (42 U.S.C. 300gg-61)--
       (A) in subsection (a)--
       (i) in paragraph (1), by inserting ``and section 2794'' 
     after ``this part''; and
       (ii) in paragraph (2)--

       (I) by inserting ``or section 2794'' after ``set forth in 
     this part''; and
       (II) by inserting ``and section 2794'' after ``the 
     requirements of this part''; and

       (B) in subsection (b)--
       (i) by inserting ``and section 2794'' after ``this part''; 
     and
       (ii) by inserting ``and section 2794'' after ``part A''.
       (d) Applicability to Grandfathered Plans.--Section 
     1251(a)(4)(A) of the Patient Protection and Affordable Care 
     Act (Public Law 111-148), as added by section 2301 of the 
     Health Care and Education Reconciliation Act of 2010 (Public 
     Law 111-152), is amended by adding at the end the following:
       ``(v) Section 2794 (relating to reasonableness of rates 
     with respect to health insurance coverage).''.
       (e) Effective Date.--The amendments made by this section 
     shall take effect on the date of enactment of this Act.
                                 ______