U.S. Sen. Jon Tester

By Dustin Hurst | Watchdog.org

HELENA – U.S. Sen. Jon Tester says he stands by his vote for the national health reform law and is calling for the federal government to go further in regulating health insurance prices.

That could mean government bureaucrats would decide if health insurance premium increases are too high — or too low.

Tester, a Democrat in a tough re-election contest with GOP U.S. Rep. Denny Rehberg this year, told the Helena Independent Record on Sunday he wants to let the U.S. Department of Health and Human Services decide how much insurance companies can charge for their products.

As the health reform law outlines, HHS regularly reviews insurance premium increases of more than 10 percent or allows states to do it under strict guidelines. The government says the evaluation process helps consumers understand where their health care dollars go and forces insurance providers into disclosing how they spend premium dollars.

“Rate review will shed a bright light on the industry’s behavior and drive market competition to lower costs,” HHS Secretary Kathleen Sebelius said in June 2011 statement.

HHS Secretary Kathleen Sebelius

Review statements on Healthcare.gov show how much insurance companies paid for marketing, medical payments for customers and administration. The site also shows how much companies profit from customer payments.

But the federal government can only review the information and post it on the disclosure website, Healthcare.gov. HHS officials cannot alter or deny altogether premium increases.

Tester wants to change that in a move that would make health insurance much like the energy sector, where public commissions or boards tell private utilities how much they can or can’t charge for services.

The rate review process is critical because it eventually could ruin health insurance providers altogether.

In 2014, each state will have a health insurance exchange, essentially an online marketplace through which consumers will buy health care. Consumers can choose private health plans meeting certain guidelines, or the exchange will direct them to online Medicaid or Medicare enrollment.

While the insurance market will undoubtedly exist after exchanges open their virtual doors, the pot won’t be sweetened by the billions of dollars in federal subsidies that will flow to consumers who buy health coverage through the exchange.

In short, the cheapest insurance will come via federal subsidies through the exchange.

That’s significant because the health reform law allows HHS to keep some insurers out of the exchange for exhibiting a “pattern” of excessive rate increases.

The rate review process could also be a slippery regulatory slope in which bureaucrats could eventually determine whether insurance companies aren’t jacking rates high enough.

In two states in the past two years, state insurance commissioners sought to implement an aggressive rate review process in complying with the health reform law, but they were denied because Republicans saw problems with the legislation.

Montana’s House Bill 105, sponsored in part by Auditor Monica Lindeen, said the state could stop rate increases for being “excessive, inadequate, or unfairly discriminatory.”

Idaho’s House Bill 423, a product of Idaho Department of Insurance head man Bill Deal, said the state could decide “what constitutes excessive, inadequate or unfairly discriminatory rates and the requirements for rate filings to be made with the Department of Insurance.”

In short, had these bills passed, Idaho and Montana could have forced insurers to jack up rates if proposed increases failed to represent sound business decisions.

Texas, Missouri and Kansas use nearly identical language for their rate reviews.

Proponents of the aggressive review say companies will often take on customers at lower rates to use them as bargaining chips in business buyout deals.

Federal guidelines don’t go quite as far in determining what constitutes an unfair premium hike, but HHS officials admit it’s a concern if insurers can’t sufficiently raise rates.

“We acknowledge that inadequate rate increases can be problematic,” wrote HHS in its July 2011 document finalizing the rate review rule. “For example, inadequate rate increases can lead to larger increases for consumers in subsequent years or even have a negative impact on an issuer’s overall financial condition.”