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Councilmember Also Lauds Obama Administration for Tackling Problem of Skyrocketing Health Premiums
Washington, D.C. – Today, Councilmember David Catania (At-Large) commended Gennet Purcell, Commissioner of the Department of Insurance, Securities, and Banking (DISB) for taking swift action to freeze skyrocketing health insurance premium increases. On Tuesday, the D.C. Council approved emergency legislation to limit insurance premium increases to 10 percent for the next 90 days. The legislation was introduced in response to reports of insurance premium increases for District residents of over 50 percent, despite a medical inflation rate of only 3.5 percent in the past year.
On Wednesday, a day after the passage of Catania’s legislation, Purcell issued an order formally rescinding the most egregious base rate increase, which was 35 percent. The order provides that affected customers will revert to their prior rate for the next 90 days and be refunded any overpayments, plus interest, while a more reasonable rate is established.
“I’m extremely pleased by Commissioner Purcell’s quick action,” said Catania. “Over the past several weeks, states around the country are discovering unconscionable rate hikes. This morning I learned of a 62 percent rate increase in the proposed health insurance premium of one of my constituents. This is simply unacceptable and cannot be justified.”
Skyrocketing premium increases have garnered the attention of regulators around the country in recent weeks. In Maine, for example, one company is seeking to raise rates 23 percent this year, after having just raised premiums 32 percent the prior year. In Kansas, government officials were able to negotiate downward a proposed 20-30 percent range of increases to a range of 10-20 percent. In response to the attempt by a California health insurance company to raise premiums by up to 39 percent, Senator Dianne Feinstein issued a statement calling such increases “unconscionable” and announcing her intent to introduce a bill which would create a federal “Medical Insurance Rate Authority” to prevent what she calls “egregious premium rate increases.”
Finally, President Obama himself has taken aim at runaway health insurance costs. According to media reports, just yesterday he interrupted a closed-door meeting between U.S. Department of Health and Human Services Secretary Kathleen Sebelius and insurance company executives. According to these reports, the President reprimanded the executives for attempting to impose massive rate hikes on their customers and read aloud a letter he received from a constituent who had recently learned that her insurance company was raising her 2010 rate by 40 percent on top of her 2009 increase of 25 percent.
On February 22, 2010, Obama proposed a plan to create a “Health Insurance Rate Authority” which would “provide Federal assistance and oversight to States in conducting reviews of unreasonable rate increases and other unfair practices of insurance plans.” This federally-created Authority would require health insurers to “lower premiums, provide rebates, or take other actions to make premiums affordable.”
“President Obama understands that rate increases of 25 to 50 percent are ludicrous in an environment where the medical inflation rate is 3.5 percent. I fully support his efforts to take a more aggressive posture in reviewing and approving these rates. In the meantime, I look forward to working with Commissioner Purcell to take steps to stop these abuses on the local level,” explained Catania.
Catania also said he plans to introduce permanent legislation in the coming days to address the currently proposed rate hikes. This legislation will contemplate consumer rebates for excessive premiums that have already been paid by District subscribers.
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