A proposition in President Obama's new health care reform plan would allow the government to block health insurance rate hikes, but the measure's impact in Minnesota, if it were to take effect, could be minimal.
Obama unveiled his health care reform plan Monday in preparation for Thursday's bipartisan summit.
One of his proposals follows last week's news that a California health insurer asked to raise rates up to 39 percent. Obama's proposal would allow the health and human services secretary to block similar rate hikes.
Congress' health care overhaul bills would have put restrictions on how insurance companies could set their rates, but President Obama's plan would create a new Health Insurance Rate Authority. This board would provide federal oversight and help states enforce and monitor rate hikes. If the government finds a rate increase is unreasonable and unjustified, health insurers would have to lower premiums or provide rebates.
PUSHBACK FROM MINNESOTA INSURERS
But some health insurers say regulation in Minnesota is already thorough. Medica's Vice President of Public Policy Dannette Coleman says when health insurers want to raise rates in Minnesota they have to back up those rates hikes with evidence and takes about 60 days.
"It's a lot of...we provide the information, [the state] might come back to us and ask questions, and we can't use those rates until [the state has] approved them," Coleman said.
Some public health experts say it's unclear just how the new federal oversight would work practically and which markets it would regulate.
IMPACT IN MINNESOTA MAY BE NEGLIBIBLE...
University of Minnesota Professor Lynn Blewett says Obama's plan is short on details as to whether the new federal oversight would add another layer of regulation or only supplement those states that have looser standards.
In the latter is the case, she says it might not change very much in Minnesota.
"If the federal government said Minnesota has met our federal requirements...then it would be similar to what we do now," she said. "Except there might be some additional requirements if it's passed into law."
...BUT COULD MEAN A LOT IN OTHER STATES
Daniel Schwarcz teaches insurance law at the University of Minnesota law school and says there's good evidence that insurance companies in other parts of the country have less competition and profits are high.
In these places, he says there's a good argument for regulation. The question is exactly what kind. One approach is to increase competition by allowing insurance companies to sell across state lines or providing a public health insurance option.
Schwarcz says the president's proposal would try to regulate rates directly as a way to keep insurers from making excessive profits.
"That is a messier approach because even if you think the market isn't going to get it right, you still have to ask the question whether the government is going to get it right," Schwarcz said. "I think it's going to be controversial. Price regulation is pretty intrusive."
The president's proposal may not please some Democrats who favor a public option, or some Republicans who say the health care overhaul already seeks to give the federal government too much control over health care.
It's unclear if his televised summit will move the debate forward or keep it where it is now, apparently stuck.