Insurance Commissioner Mike Kreidler is asking the Legislature for rate reforms that would make health insurance rates public, renew his authority over individual health insurance rates and give him – for the first time – the authority to limit rate increases of non-profit health carriers if they have hundreds of millions of dollars of surplus.
Kreidler testified earlier today before the House Health Care and Wellness Committee on all three proposals, calling his measures a reasonable, balanced approach to rate regulation.
House Bill 1303 gives the insurance commissioner permanent authority to review rates in the individual health insurance market. Under today’s law, this authority expires on Jan. 1, 2012.
“We fought for many years to restore rate review authority to this office,” said Kreidler. “Consumers deserve to know that someone is looking out for their interests and that the rates they’re being charged are justified.”
House Bill 1220 makes all health insurance rate filings public. Currently, when a health carrier submits a rate request, the information they use to justify the change is not releasable. Even once a rate is accepted, the public cannot see the detailed information behind the request.
“When health insurance rates go up, consumers call my office seeking answers,” said Kreidler. “They want to know how the increase – often double-digit—can be justified. Under current law, I can’t tell them why the change was granted. This proposal gives the public the right to see what we see – for example, how much of their rate is going to medical costs, how much is for administrative expenses and how much is profit.”
Kreidler added that he believes transparency of rates in today’s health insurance market is only fair. “There’s nothing in insurance rate filings that should be considered proprietary,” he said. “If the insurance companies want to raise rates, their consumers deserve to know why.”
House Bill 1301 limits the rates that non-profit health insurers can charge if they’ve amassed large surpluses.
“The three largest health insurers in Washington—Group Health, Premera and Regence—are all non-profits and collectively have more than $2.4 billion in surplus,” said Kreidler. “That’s $2.4 billion above what they expect to pay out in claims. How much is enough? At the same time, their rates have risen dramatically in recent years. I don’t think it’s fair for them to keep adding to their surplus at a time when consumers are dropping their insurance because of rising rates.”
Kreidler added that his proposal is a balanced, reasonable approach. It also would leave insurers a large cushion for unforeseen events, such as a flu pandemic. However, if they have a pattern of consistently underestimating what they actually make on a rate, he also wants the authority to take that into account the next time they file a rate increase.
“It’s my job as insurance commissioner to make certain that health insurers have enough money to pay claims. I take that role very seriously,” said Kreidler. “But it’s also my duty to ensure that consumers, who are struggling to afford health insurance, aren’t paying more than is absolutely necessary.”
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Learn more about Insurance Commissioner Mike Kreidler’s legislative agenda at: www.insurance.wa.gov/legislative/index.shtml.
