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Jamie Court: Time For Obama To Get Tough On Insurers With Rate Freeze Via Executive Order

Obama’s mad about insurers blaming his health care plan for big rate hikes, but he doesn’t have to take it any more. He can and should issue and executive order to stop the rate hikes immediately.

A Blue Cross policyholder emailed me last night about her recent 20 percent rate hike, and now being pushed into a policy that costs that much more and comes with a $7500 deductible. Her insurer’s response: blame the president and his “10,000 page legislation.”

That’s electioneering in my book. The President needs to fire back, and protect customers, as well as the integrity of his patient protection act. This is the type of out of the box thinking that Americans expect from their President, and he has yet to deliver.

Consumer Watchdog today wrote the President asking that he freeze health insurance premiums to protect consumers from unjustified and unreasonable increases until new rules under the health reform law requiring public justification of unreasonable premium hikes take effect later this year.

The Supreme Court has held that a President may issue an Executive Order where the President has been expressly or implicitly authorized to act by the Constitution or Congress. Under the federal health reform law, Congress expressly provided that, beginning with the 2010 plan year, health insurance companies cannot raise insurance premiums until insurers “submit to the Secretary and the relevant State a justification for an unreasonable premium increase prior to the implementation of the increase.”

Here’s the reasoning behind the executive order: HHS is working to finalize regulations by the end of 2010 defining an “unreasonable premium increase.” It’s not yet possible for regulators to determine which premium increases require a justification from insurers. So an Executive Order freezing premium increases until insurers have justified increases deemed unreasonable is necessary to implement the express requirements of the federal law.

There is precedent for the success of such a freeze. In California, Proposition 103 enacted the nation’s strongest prior approval system for property and casualty rate regulation in 1988. California’s insurance commissioner ordered a freeze on all rates until implementing regulations were enacted, and insurers complied. Despite claims that the freeze and new regulation would drive insurers out of the state, or out of business, the state’s auto insurance market is the 4th most competitive in the nation and stayed profitable, while auto insurance premiums rose at the slowest rate in the nation, according to a 2008 analysis by the Consumer Federation of America.

An Executive Order establishing the premium freeze could be written to end when those regulations become effective, thus allowing premium increases to go into effect only after unreasonable increases are justified by insurers as intended by Congress.

Will Obama get tough on insurers? He has the power, now he just needs the presidential will.

This article appeared originally on The Huffington Post.

Jamie Court is the author of The Progressive’s Guide to Raising Hell, available now.


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