LD 1294 - "An act to establish a health care bill of rights"

April 5, 2007

Senator Sullivan, Representative Brautigam, and fellow members of the Insurance & Financial Services Committee. I am very pleased to be the sponsor of LD 1294, “AN ACT TO ESTABLISH A HEALTH CARE BILL OF RIGHTS.”

As we all know, health care costs have been on an upward trajectory for years. So too has the cost of health insurance. Not surprisingly, the number of uninsured, and the amount of medical debt, has also been rising. The New York Times recently reported that more and more, the uninsured are the middle class: more than one-third of the uninsured in the U.S. have annual family incomes of more than $40,000, and more than two-thirds of the uninsured live in a household with one full-time worker. More and more employers are dropping coverage because of the costs, and the price of health insurance on the individual market is too expensive for many.

Nationally, health insurance premiums for workers and their employers have skyrocketed by 87 percent since 2000, according to a recent survey by the Kaiser family Foundation. Meanwhile, workers' earnings have risen by 20 percent over the same time period. The proportion of workers receiving benefits from their employees has fallen from 65 percent in 2001 to 59 percent in 2006. This affordability gap is leading consumers to rate health care costs as one of their top economic concerns in polls.

Maine is the only state in the Nation to see a reduction in the number of uninsured last year, the result of the availability of the DirigoChoice policies and our efforts to sign up children and their parents with MaineCare. Still, we have a long way to go in making sure that everyone has health care and that comprehensive health insurance – insurance that includes prevention and doesn’t have high deductibles - is affordable. For example, since 1993 rate increases for Anthem’s HealthChoice Standard and Basic Products sold in the individual market have been as high as 23.5% (January 2001) and in the past 2 years were 14.5% (March 2005), 16.3% (March 2006) and 16.7% (November 2006). Keep in mind these increases are cumulative.

LD 1294 focuses on insurance affordability. If passed, it will reform the way that the State of Maine reviews health insurance rate increases and insure that consumers are represented in the rate review process. Specifically, the bill:

• Requires the Bureau of Insurance to hold hearings when a rate increase is proposed.
  

  Right now, large groups file and then impose the rate increases; no there is no hearing to review the rate increase and no formal approval process. Small group rates are also not subject to a hearing and approval process UNLESS the carrier fails to meet the current 3-year rolling average for its loss ratio; there have been NO rate hearings on small group rates since this provision went into effect in 2003. Nongroup rates are subject to hearing, review and approval if certain conditions are met, if the Superintendent decides to hold a hearing, or if ratepayers ask for and are granted a hearing. However, the only nongroup carrier that has had its rates reviewed is Anthem (even though there are 3 other nongroup carriers in the Maine market).
  

  This bill will insure that small group and individual plan rate increases are subject to a hearing. I know the Bureau has concerns about the number of hearings this requirement would entail and the resources this requirement would require. My concern is that under current law hearings are not being held when they shouId be. I am open to working with the Bureau on this provision of the bill to see if there is a middle ground.
  

• Gives policy holders more notice of rate increases and rate changes.
  

  Recently, policyholders have been given as little as three weeks notice of rate increases, not enough time to either request or effectively participate in rate hearings before the Bureau of Insurance, should such hearing be provided for.
  

• Insures that consumers are represented in rate hearings by requiring an advocacy panel to represent the interests of consumers and the public. It also would require an independent hearing officer to conduct rate hearings.
  

  Rate hearings are exceedingly complex proceedings and not well suited to public participation without representation by lawyers specializing in health law, with a budget to hire actuaries to review the financial data. In 2002 I intervened in one such hearing to try to roll back a proposed rate increase on individual policies. I did this on my own clock and dime because the increase proposed was huge and I had constituents who would be forced to drop their policies if the rate increases went through. I petitioned the Bureau to appoint an advocacy panel to represent consumers, which under current law it may, but is not required, to do. The Superintendent denied my motion. I have found my closing statement from that case, where I commented on the process:
  

  … I am extremely disappointed that the Superintendent has refused to appoint an advocacy panel to assure that Maine consumers are formally represented in this rate hearing. Now that I am an Intervenor in this proceeding and have had an opportunity to review the filings, I am even more convinced that a panel of experts is necessary to review the data and assist in representing consumer interests. Neither Consumers for Affordable Health Care nor my office has a budget available to hire the kind of experts necessary to review and analyze this complex and voluminous rate increase filing. Nor does the Attorney General fill this void, since that office has chosen not to intervene.
  

  Because of the large volume of pertinent data that is covered by confidentiality restrictions, there is no way for the public to participate effectively without intervening. Even though health insurance rate increases have a far greater impact than electricity bills on many consumers, who may face bankruptcy in the face of a catastrophic illness, consumers have less representation in insurance hearings. In the case of a hearing on electric rates, the Public Advocate is there to intervene on behalf of consumers and has a budget to hire technical experts. Here, the Superintendent serves in a decision-making role similar to that of the Public Utilities Commission, but unlike a PUC proceeding, there is no advocacy staff to present the case on behalf of consumers.”

  
  

  I note that other states do have much better representation of consumers. For example, Texas has an independent Office of Public Insurance Counsel who “represents the interests of insurance consumers in this state” and is authorized to, among other actions appear or intervene as a matter of right before the commissioner or department on behalf of insurance consumers, as a class, in matters involving rates, rules, and forms affecting health (and other) insurance.
  

  West Virginia created an Office of Consumer Advocacy in 1991 to represent consumer interests in hospital rate and certificate of need applications. The Consumer Advocate is authorized to represent the public interest in matters coming before the Insurance Commission relating to matters involving health care costs and health insurance.
  

  Florida has a consumer advocate that participates in rate hearings, as well as in consumer complaint hearings on insurance matters, has access to and use of all files, records, and data of the department or office, may examine rate and form filings submitted to the office, and hire consultants as necessary to aid in the review process.
  

  The advocacy panel required by LD 1294 is one way to provide greater consumer protections in the review of health insurance rates. We could also give this task to the Public Advocate as another bill before us today proposes to do, and I would also support that approach. The main thing is, let’s do something. Consumers are not adequately served by the present process.
  

• LD 1294 also contains several provisions to insure that the Bureau has the tools it needs to fully review rate filings and to turn them down if they are not justified:
  1. It insures transparency for rate filings and decisions to grant or deny rate increases are transparent, by clarifying that all rate filings and information and documentation used to support the filings are public records and may be disclosed to the public;
  2. it changes the legal standard for reviewing whether rates are appropriate from “not excessive” to the standard that rates be “reasonable and necessary”, which makes it less difficult for the Superintendent to overturn a rate increase that is not justified by the evidence; and
  3. it specifies in law the standards which must be met and supported by evidence in the record in order for rate increases to be approved.
  
  
• This bill will also insure that carriers provide demonstrable proof and quantify the amount of any recovery of the savings offset payment through negotiations with health care providers as part of rate filings.
  

  Carriers should not be permitted to pass through the SOP to ratepayers where they have recovered savings from health care providers. This provision would insure that the Bureau has the information it needs to review rate filings and make sure the rates reflect savings that have been achieved.
  

• LD 1294 increases the minimum loss ratios for individual and small group health plans and requires carriers to refund to policyholders the difference between the required loss ratio and the achieved loss ratio in instances when the carrier does not meet the minimum standards.
  

  In plain English, more of consumers’ premium dollar must go to pay off claims and less to administration and profit.
  

• Finally, the bill repeals insures that consumers may resolve disputes about health care decisions in a legal action.
  

  I know the Bureau has concerns about this provision and I am sure the carriers will as well. It is intended to correct an overly broad exclusion in current law, and I am willing to work with the Bureau to more clearly define this change.

  Thank you for bearing with me in this complicated area of the law. The bottom line is, consumers need a break from high health insurance costs. When a rate increase is approved, let’s make sure that increase is fully justified, there is strong evidence in the record, and someone is there to specifically represent the consumers’ point of view. That’s what this bill will do and I urge your support.