The White House and Congress should embrace "prior approval" regulation of health care rates in response to the health insurance industry's threat that costs will increase under a reform plan being considered by the U.S. Senate Finance Committee today.
Consumer Watchdog, which pioneered the most successful insurance premium regulation law in the nation, said that strong "prior approval" regulation should be extended to health insurers in every state. Such regulation has saved drivers in California $62 billion on auto insurance rates since 1988 under Proposition 103, and similar savings would be expected for health insurance rates.
"There is a simple response to the insurance industry's threat to raise our health care premiums: require insurance companies to justify those increases and allow consumers to intervene to block excessive charges," said Jerry Flanagan, health policy director of Consumer Watchdog. "California's 'prior approval' rate regulation is the nation's most successful insurance regulation in the nation and a successful model to restrain rampant insurance company profiteering and waste."
Since 2003, Consumer Watchdog has saved $1.7 billion by challenging unnecessary premium increase and insufficient decrease requests using the public intervention process.
A 2008 Consumer Federation of America report detailing the savings of Proposition 103 can be downloaded at: http://www.consumerfed.org/pdfs/state_auto_insurance_report.pdf. A related press release is available at:>