Illinois consumers poised to benefit from new Insurance Regulations

Rate Review Bill Will Offer Greater Consumer Protections & Fairness

(From the Campaign for Better Health Care)

 

Springfield, IL – Legislators introduced a bill, HB1501, Health Insurance Rate Review.  If passed, for the first time in Illinois, individuals and families would have protection against unwarranted and exorbitant premium increases for health insurance. The bill requires all insurers and HMOs to report to the Department of Insurance premium rates and information justifying the rates for all individual and group health plans.

Leading health insurers have accumulated a combined 2010 surplus of $28,353,715,566, even while individuals and families in Illinois have paid a cumulative average rate increase of 181.8% since 2005. Surplus is a company’s total assets minus liabilities. In other words, the surplus is what’s left after ALL other possible costs of doing business (including all possible future claims by policyholders, paying dividends to shareholders, etc) are accounted for. A company is free then to use this surplus for any reason – it can buy another company or increase their political PAC contributions to politicians to stop the health care reform law from being implemented in Illinois.

Illinois consumers want more control, stronger protections, and greater transparency in the insurance process. Rate review provides just that. It means that insurance companies will now have to prove the need to charge their customers more, and will not be allowed to do so unless they meet strict criteria. HB 1501 requires the Department of Insurance to disapprove premiums that are excessive, inadequate, or unfairly discriminatory.

Current Illinois law does not restrict health insurance premium increases and does not vest in the Department any rate review or approval authority. It does give small businesses (2-50 employees) nominal protection against rate increases, but small employers remain vulnerable to unpredictable and dramatic increases at renewal. Passage of HB1501 will bring Illinois in alignment with 30 U.S. states already with authority to approve or deny premium rates for individual and/or group health insurance coverage, including the nearby states of Indiana, Iowa, Minnesota, Tennessee, and Ohio.

Under rate review, insurance companies will have to justify their requests for rate increases to the state Department of Insurance, and they cannot raise your rates unless their request is found to be reasonable and justifiable. The state Department of Insurance will act as a watchdog to ensure that rate increases are fair, needed, and enacted in accordance with the rules. That is strong protection for insurance consumers in Illinois.

The process is fair for both insurance companies and insurance consumers. Rates cannot be raised unless the review says they can, but insurance companies whose increases are denied, or consumers who disagree with a decision to allow rate increases, will have the opportunity to appeal the decision.

“With more information about the rationale for rate increases, consumers will be better prepared to make an informed decision about whether or not to purchase insurance from a specific company. This should stimulate positive competition in the health insurance marketplace, and benefit consumers by lowering costs,” said Joan Sheforgen, CEO of PrimeCare, a Chicago-based Federally Qualified Community Health Center.

Jim Duffett, Executive Director for the Campaign for Better Health Care, said, “Individuals, families, and small employers in Illinois who are fortunate enough to obtain an affordable offer when first purchasing a health insurance policy often face unaffordable premium increases upon renewal. The rate review process will slow down sudden exorbitant cost increases for insurance, allowing all health insurance consumers including working families and small business owners the ability to obtain quality, affordable insurance for themselves and their families.”

“Health care reform is the key to economic security and opportunity for American families. Rate review is just one of the ways we will make the system more fair for everyone,” he concluded.