PA One of 2 States Without Rate Review

Sharon Ward, Executive Director of the PA Budget and Policy Center and a member of PHAN's leadership team, was the special guest speaker on last night's policy call, Rate Review in PA and the Medical Loss Ratio.  (Scroll to the bottom for a list of upcoming calls).

Ward went through some of the new regulations on insurance companies put forth through the Patient Protection and Affordable Care Act.  Many of these we're familiar with, such as the ban on life-time limits that goes into effect this year. 

What we need to remember is that states are going to continue their role of regulating insurance companies.  Therefore, many of the enforcements around these federal protections will fall to the states.

Pennsylvania, unfortunately, is one of the worst states in terms of consumer protections.  We are only one of two states, for example, that does not have rate review.  In 48 others insurance companies must submit rates to be reviewed and approved by insurance regulators.  States have different methods for this, but they all have some sort of protections for consumers in the rate setting process.  This serves as a powerful tool to ensure that rate increases are based on the actual cost of claims.

Our Insurance Commissioner, however, has little power to set and review rates.  In fact, he, Joel Ario, can only review rates set by the non-profit arms of Blue Cross and Blue Shield.  So what happens?  The 'non-profit' subsidiaries move more and more policies to their for-profit side, allowing them to go without rate review.

PA also fails consumers by allowing insurance companies to participate in medical underwriting.  This means insurance companies can set rates based on the health history of an employee or demographics like age and gender.  Ward pointed out how this is a particular problem for small businesses where one employee gives birth or gets sick and the premiums rise dramatically for everyone.

So, what's to be done about this?  There is a bill in the State House, HB 746, that is great for consumers and small businesses.  It will create a smooth transition to federal reform and give the Insurance Commissioner the authority to review and reject rates.  This bill, however, has been stalled in the Senate for some time due mostly to the overwhelming influence of the insurance lobbyists in both Houses and parties.

The place to begin is really where we also do, in education.  If you want to contact your State Rep and advocate for HB 746 then use our online tool to find your legislator and give them a call!  But, it is most important right now to help us educate others.  Write a letter to the editor, forward this post to friends, talk about it to others in our state.

Most Pennsylvanians are not aware they're in one of two states in the country that doesn't have a real rate review process.  They are however, quite familiar with the impact that giant rate increases have on their family budget and business.

PHAN's Policy Call Series runs Tuesday nights at 6:00 PM.  To join in any or all of these email Athena at aford@pahealthaccess.org.  Guest speakers are TBA.

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