Home / Opinion / Majority favors prior approval for health insurance rate hikes

Majority favors prior approval for health insurance rate hikes

Nearly three-quarters of respondents to this week’s RBJ Daily Report Snap Poll favor a return to requiring that health insurers get prior approval from the state Insurance Department for rate increases.

Gov. David Paterson’s proposed budget contains a provision that would require health insurers to get Insurance Department approval, as they had to do until the mid-1990s. Those who favor the plan say that without it insurers have a blank check to impose double-digit rate increases with no government oversight.

Opponents of prior approval contend that it is a cumbersome price-control mechanism which did not work in the past and would not work now.

By a margin of 72 percent to 28 percent, readers favor reinstating prior approval for rate increases.

Roughly 518 readers participated in this week’s poll, which was conducted March 15 and 16.

Should health insurers in New York be required to get prior approval from state regulators for premium rate increases?
Yes: 72%
No: 28%

Here are some readers’ comments:

Absolutely. Why should the process be any different than for RG&E or another utility seeking a rate increase? The weakest excuse in the book: “We tried that before and it didn’t work.”
—David Lamb, Rochester

Price controls have been tried in the past on specific items and on all items. They have never worked.
—Jim Haefner, Pittsford

Well, let’s see. Health insurers in New York require patients, physicians and hospitals to get prior authorization for a whole host of medically necessary, oftentimes emergency, treatments. If no authorization is gotten, the insurer simply refuses to pay. To make matters worse, the insurers are constantly changing the types of services that require prior authorization, knowing that every error that is made means they don’t have to pay for the service. So I would say yes, make them get prior approval for rate increases. Let’s see how they like it.
—Joe Fabetes, Rochester

They should be regulated just like the utilities under the Public Service Commission.
—D. Hebert

Every government-run program in the past has resulted in exacerbated cost overruns. Why does the government think it can regulate the insurance industry? In my opinion, health insurers in New York or any other state would be better off if the government stayed out of the way. I agree with others that prior approval is cumbersome and will not work now or any other time. Government regulation only serves to impede progress.
—Phil Turturici, Absolute Consulting

Absolutely. The constant double-digit yearly increases are devastating to the small business and its employees.
—Seth Oser, Oser Press

Price controls have never worked. That is the problem with Obama’s approach. The issue of health care costs is not necessarily because of the insurance companies. They are set up to make a profit, so if government interferes with that we have less availability of insurance coverage. If there was interstate competition for insurance and tort reform, there would be health care cost reduction. Allowing market forces to control insurance rates is the “natural” and preferable approach.
—Mike Kaser, Penfield

Prior approval of health insurance increases is necessary and appropriate in light of our current economic crisis. The business community states that rising health care costs are a greater concern to their bottom line than are taxes. As costs are shifted to employees and the government, we continue to pay more and get less. If one looks at the work done by Consumers Union on prior approval, you would realize that regulatory oversight benefits everyone. It prevents insurers’ greed from making insurance unaffordable and thereby pricing themselves out of the market. It also protects the purchaser of insurance when excessive rate increases are unjustified. When most health care markets in this country are dominated by two or three insurance companies most of us are left with no choice or option. The free market approach to health insurance has not worked. Even President Obama has called for greater regulation of insurance rate hikes in response to what transpired in California. It is far better to have a system in New York than one far removed in Washington telling us how to do our job.
—Jim Gaden

With health care such a topical national and critical issue to the well-being and future of people in this country, there MUST be some oversight of ever-spiraling costs. All the proposed legislation I have seen thus far relates to putting Band-aids on the source—with no attempt to treat the source of the disease—drug companies and also partially insurers (I realize they are subject to pharma also). With health care costs rocketing for the average Joe—and I include myself regardless of title—many times past inflation each year, there has to be some form of containment. Perhaps the insurers can stop spending on high-end computers and software (and just buy what is absolutely necessary), or perhaps move to lower-cost premises, or stop paying their execs so much for what should be basically a routine desk job… are they truly non-profits? Cost containment is crucial for any health care reforms to work—and this is at least a step in a positive direction if not the final answer.
—Richard Stevenson, co-founder and CEO, CobbleSoft International

The way to get rates down and keep rates down is competition. If there were more than two major insurers in our area, the rates would always be "competitive." Why can’t health insurance companies compete across state lines like auto insurance companies? We need more competitive health insurance rates and more commercials with gecko-like characters for our ads.
—Clifford Jacobson, WebHomeUSA.com

Every government-run program in the past has resulted in exacerbated cost overruns. Why does the government think it can regulate the insurance industry? In my opinion health insurers in New York or any other state would be better off if the government stayed out of the way. I agree with others that prior approval is cumbersome and will not work now or any other time. Government regulation only serves to impede progress.
—Phil Turturici, Absolute Consulting

Should the Rochester Business Journal be required to get prior approval for rate increases?
—Ed Jackson, Honeoye

This was an economic hardship on not only the insurers but the businesses that had to wait for the state to give the info to the insurance companies to allow them to set the rates. The delays by the state delayed businesses the insurers. Many companies (and school districts) had to borrow money and incur interest payments while they waited for the information that they needed to provide information to their employees on their most valuable benefit. It was a disaster. There has to be a better, more financially reasonable way to influence insurance companies to set prices appropriately.
—Emily Neece

Yes, but as always in New York it will be a scam. Just like the PSC. … So they ask for a 10 percent increase knowing they only need 5 percent, and the PSC settles for 5 percent and everyone is happy. The governing body over insurance companies needs to be completely independent (and not government-run). The government could screw up a wet dream.
—Jim Duke

Price controls do not work. If insurers cannot raise rates they will have to deny services. Rates go up for a variety of reasons—yet, the insurers only net a rather small percent of premium revenue. What is needed is competition and less government intervention. Rates are higher than they need be because the state already mandates they provide generally optional services.
—Robert Simonson, SueCee Jewelry

My "no" response should not be taken to mean no regulation is necessary. I do not believe it should be the government. Every year there is an escalation in insurance premiums and it typically occurs after the enrollment period. I have to believe the government’s intervention will not stop these increases. The whole health care system is out of control relative to costs. The standard response by insurance companies is that the health care costs are increasing therefore they are only passing on the increase to their clients. As I believe this to be a true statement I also believe that until the overall health care system is brought under control, and not necessarily by government control, the costs will continue to escalate beyond what anyone can afford, with or without government intervention.
—William Nash, Ultrafab Inc.

I agree with this but there is more to this problem than meets the eye. This is a band-aid fixing the symptom and not the cause. The pharmaceutical companies are out of line in the outrageous prices they charge on many of the much needed medicines. The more a person needs a drug, the more it costs. If you get cancer and want to live another year the price goes up to $40,000 a month, what’s wrong with this picture? The doctors go along with this because they make more money; the politicians go along with this because the drug companies donate large amounts of hush money to their political campaigns. The health insurers go along with it that’s not too hard to see. Greed, when are people going to learn?
—John Mechetti

OK, I said "Yes" BUT, let’s be realistic here. First, does the state insurance department have the resources and the information to make an intelligent decision? What criteria would they use for denial of a requested rate hike? Can they also impose limits on top management compensation? (That one really bugs me). How in H— can you have a "non-profit" that pays its senior management millions in compensation? Talk about fueling rate hikes! There should be tighter controls, I agree with that. But, why not start by changing the law to allow more competition from insurers out of New York? Car insurers can do that. Geico and Progressive are advertising all the time for our car insurance business. Why not health insurers? The way I see it, the current situation is just obscuring a problem that is very difficult to control without more free market participation.
—Rick Bradley

Should lawyers?
—Bob Brinkman

It appears that all health, car, life, home insurances are just taking people’s money. When the going gets tough the insurers drop or find a loophole. If you have insurance to pay your mortgage when laid off from work try that claim. They will try at all cost not to pay.
—Anthony Casserino

In light of the egregious increases in health insurance rates, the RBA’s stance against prior approval just highlights how ineffective it is to have a chamber of commerce that has all the major insurers on its board. The one organization that should be lobbying FOR tighter insurance controls is instead lobbying against it. The RBA’s arguments that the rate increases would be delayed is specious. That situation exists today. The insurance companies should be forced to submit all data and justifications three months in advance of the end of the year, and the insurance commissions should have a decision on each increase no later than four weeks later, with two weeks to amend. Instead of lobbying for that, the RBA simply tosses in the towel, refusing to lobby for the businesses they supposedly represent. Finally the RBA should remove all insurers from its board and refuse to accept monetary contributions from same to show their objectivity on this issue.
—Lee Drake, OS-Cubed Inc.

Any regulation that the Rochester Business Alliance is against, I am for. The history of deregulation, what it has done to the global economy and average Americans, is no longer debatable by reasonable people. The real question should be a requirement to justify why health insurance companies should continue to exist.
—Jim Bertolone, AFL-CIO

This, like its close relation utility rates, has been a source of the inflation we’ve all felt ever since it was deregulated. Let’s face it: deregulation was a scam foisted on us by Plutocratic Ideologs with no interest in service, only in getting as deeply into our wallets as possible. Same for the gas  and electric. Bring them all back under close state scrutiny.
—John Perry, Smith Total Information, Inc.

We need less involvement from government, not more. One of the major reasons for huge increases in health care premiums has been additional government mandates for coverage. For example, Timothy’s Law which was enacted by New York in 2004, mandated parity for mental health care services and addiction treatments with other health care services. So if you have a $15 co-pay to see a specialist, that’s all you would pay per session for psychiatric treatment. It sounds great in theory, but that extra money has to come from somewhere!
—Karen Zilora, Creative Scanning Solutions, Inc.

But, with the shape of New York government, the state regulator will probably be either a rubber stamp or a buy-able commodity, granting that increase as a matter of course.
—Hutch Hutchison, In T’Hutch Ltd.

When you consider what has happened with controls, it is unthinkable to imagine what would happen without them.
—Dave Sliney, Macedon

If NYS wishes to control health insurance costs, how about some meaningful tort reform?
—Tom Shea, Thomas P. Shea Agency, Inc.

There’s something wrong with this question. Every year, my rate goes up, and almost every year I’ve receive letters informing me of how much rates will increase, only to later receive an updated letter that indicates the state insurance department only approved a partial rate increase. This question implies new oversight, yet empirically there is evidence that oversight is already happening. How this new legislation changes the regulation that is apparently already going on is a key question must be answered before I can take a position on this matter.
—Perette Barella, DeviousFish.com

This PA depends on how ethical and unbiased the overseeing body is and with NYS politics as they are, I have reservations. That said, the health insurance rate increases and much of what the health ins. companies are allowed to get away with (i.e. practice medicine without a license essentially) has got to end.
—Leslie Apetz, MHA (in health care since ’81)

New York businesses are looking for relief from the increasing cost of providing health insurance for their employees. Unfortunately, prior approval does nothing to get at the underlying causes of rate increases. Insurance coverage isn’t magic; it’s just a way of spreading risk among a large population of people. The vast majority of the premium dollar is spent providing care—paying hospitals and facilities, doctors and pharmacies. Those costs are influenced by an ageing population and treating a variety of conditions that are related to our less-than-healthy lifestyle choices in the areas of diet, smoking and exercise. The bottom line is that there are plenty of things that can be done to drive lower health premiums, but prior approval of rates is not one of them.
—Matthew McDermott, SPHR Employee Benefits Consultant, the Landmark Group

If they open the New York State market to more competition, I’d say they should price accordingly. However, with limited insurers, a lack of approval is a license to steal. Speaking of stealing, will we steal our government back in November or will we continue to be "Slaughtered"?
—Bill Lanigan, Chamberlin Rubber

(c) 2010 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail rbj@rbj.net.


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