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Responding to reports of hefty rate hikes, the D.C. Council is set to vote on a measure that would restrain health insurers’ ability to raise prices on policyholders.
At a press conference yesterday, At-Large Councilmember David A. Catania repeatedly referred to recent “unconscionable” hikes by city insurers—-indeed his legislation is styled ‘The Unconscionable Health Insurance Premium Increase Emergency Act.’ He cited only one insurer—-CareFirst BlueCross BlueShield, the District’s largest—-as participating in these hikes, citing raises of up to 55 percent.
“We can see no justification for 55 percent increases this year over next year,” he said, adding: “We need some aggressive consumer protection.”
Catania compared the situation in D.C. to California, where another Blues affiliate, Anthem, has come under intense scrutiny for rate hikes there. Under Catania’s bill, insurers could raise rates no more than 10 percent in a year. In extraordinary circumstances, the city insurance commissioner could approve greater hikes, up to 15 percent.
The proposal has set off a flurry of last-minute lobbying in the council chamber. LL spied CareFirst’s Tonya Vidal Kinlow making last-minute appeals to members before the legislative meeting started this morning. LL overheard her telling At-Large Councilmember Kwame Brown that her employer would like a “public-policy debate” about the bill rather than rush it into effect via emergency legislation
It’s the latest in many conflicts between Catania and CareFirst—-most notably, his targeting of the company’s reserves as excessive.
Kevin Kane, a spokesperson for CareFirst, says his company is “reviewing the legislation and its impacts.”
UPDATE, 2:15 P.M.: The emergency measure passed by a voice vote, though Ward 7’s Yvette Alexander and at-larger Michael A. Brown raised objections on a preliminary vote. Catania and co-sponsor Muriel Bowser of Ward 4 pledged to hold a hearing on a permanent health insurance reform measure within three weeks.
UPDATE, 3:55 P.M.: CareFirst has issued a statement:
CareFirst BlueCross BlueShield (CareFirst) understands and shares the DC Council’s concerns about the rising cost of health care coverage. As a not-for-profit insurer, CareFirst operates on the thinnest of margins – essentially providing services at cost. Premiums rise because the associated health care costs rise. CareFirst is striving to restrain the rise of health care costs and regrets that premium increases are necessary.
CareFirst is currently subject to regulatory oversight and only charges premiums that have been reviewed and approved by regulators in each of the jurisdictions in which we do business. In the end, there are two tests of the reasonableness of CareFirst’s premium rates. They cannot be so low as to cause unsustainable losses, nor so high that they cause excessive “profits.” In the case of CareFirst, the profit margin is negligible. If there is any margin left over after paying medical and administrative costs associated with member coverage, it is placed in reserve for the protection of policy holders.
The entire situation is a difficult one. Artificially limiting premiums so that they do not reflect the actual costs can be done only in the short term. In the long-term, premiums must realistically reflect the costs they are intended to cover. The company is dedicated to trying to control costs and seeks to avoid increases in premium to the maximum extent possible