Health Insurance Reform May Update

While the underlying cost of health insurance services remains an under-reported issue, there are signs that this may be changing. The California legislature, for example, is beginning to turn its attention to rising hospital and provider costs, and not just the rising cost of premiums. Just in time, the U.S. Justice Department announced last week that California’s largest health care purchasers can proceed with an extensive study of the costs of care at more than 300 hospitals statewide. The California Hospital Association tried to block the project claiming antitrust concerns, but the Justice Department rejected the claim. Only by addressing costs throughout the health care system will the nation begin to slow the overall cost of health care and truly deliver on the promise of health care reform. Transparency remains a very important part of the equation.

In January, the U.S. Supreme Court ruled in the Citizens United case that the First Amendment protects the right of corporations, as citizens, to spend corporate funds on political advertising advocating the election or defeat of a particular candidate. In an effort to stave off an anticipated onslaught of corporate money infusion in this year’s elections, the Democratic majority introduced legislation last week to curb any such corporate activity. The core component of the legislation would require corporations (and unions) in the name of transparency to disclose their spending on political advertisement. This legislation is very likely to be a key subject of debate for the rest of the legislative year as Democrats seek to rally consumers and other groups in favor of the bill, and Republicans use the measure as a rallying cry against what they view as an infringement on the First Amendment.  It is not at all clear, at this stage, whether this bill has legs or whether corporations will even take advantage of the Supreme Court’s ruling. What is clear is that the issue will further drive a wedge between the two parties.

In response to WellPoint’s proposed rate increase in the California individual health insurance market in January (now rescinded), Senator Dianne Feinstein (D-CA) had proposed legislation to establish a Federal Rate Authority to both review “potentially unreasonable” increases in health insurance rates (in conjunction with the states) and to endow the federal government with new regulatory powers with respect to the Authority’s findings. Although this provision was not included in health care reform, Senator Feinstein now is poised to offer her bill as an amendment to other legislation moving through the Senate — starting with the financial regulatory reform measure currently before the Senate. The Feinstein proposal would further erode the traditional role of the states with respect to insurance matters and was opposed by Aetna and the insurance industry. Aetna will oppose this new tactic as well.

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