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As reported by the Associated Press, a House committee has voted to strip the health insurance industry of its exemption from federal antitrust laws as senators announced plans to take the same step. The House Judiciary Committee voted 20 to 9 to repeal a law that exempted the health insurance industry from federal controls over certain antitrust violations, including price-fixing. It is our belief that this repeal will not likely survive any national healthcare bill.
No More Gender Rating in California
The practice of paying different rates based on gender for the same insurance is called gender rating. Effective January 1, 2010, health insurance companies and HMO’s writing insurance in California will not be able to charge men and women different rates for the same type of insurance policy. It has been reported that currently, California women pay anywhere from 5% to 30% more than male counterparts for equivalent insurance, even on policies without maternity coverage.
The issue was helped along by San Francisco City Attorney Dennis Herrera who sued state officials for gender rating, claiming that the practice violates provisions of the California Constitution. The suit was stayed while details of the bill were negotiated and, in light of the new California health insurance law, will likely be dismissed.
President Proposes National Insurance Office
The Obama Administration is proposing the formation of a new office within the Treasury Department that would oversee the insurance industry. This announcement comes in the wake of statements from Treasury Secretary Timothy Geithner in February that some form of federal insurance oversight will likely be a part of a forthcoming financial regulatory overhaul.
Congressional bill H.R. 2609, also known as the Insurance Information Act of 2009, will establish within the Department of the Treasury the Office of Insurance Information. This new office will have the authority to monitor all aspects of the insurance industry, establish Federal policy on international insurance matters, serve as a liaison between the Federal government and the several States regarding insurance matters, and serve as an advisory to the Treasury regarding the export promotion of United States insurance products and services.
Congress is also debating legislation by Congressmen Ed Royce (R-Calif.) and Melissa Bean (D-Ill.) which would create an optional federal charter through an Office of National Insurance. A federal charter would create a framework for a national system of state-based regulation and create uniform standards in such areas as market conduct, licensing, the filing of new products and reinsurance. California Insurance Commissioner, Steve Poizner, has come out against the Royce-Bean legislation and is lending his support for the administration’s bill.
The administration’s plan avoids the trap of creating a federal insurance regulator, which I have consistently opposed. It appropriately acknowledges the primary role the states play in regulating the insurance business to benefit consumers. State oversight of insurance companies, coordinated among all state regulators, is the reason that, among all the financial players in this country, it is the insurers who are and remain the most stable and the least in need of federal assistance.
Although it is unclear which bill has more political support, the House Committee on Financial Services will review both the Insurance Information Act and the proposed federal charter in the coming months.
