Thursday, September 15, 2011
Testimony Challenges Proposals that Would Strip Away Consumer Protections in Healthcare
WASHINGTON, D.C. – Lynn Quincy, senior health policy analyst for Consumers Union, the nonprofit publisher of Consumer Reports, will testify in a House Energy and Commerce subcommittee hearing today to highlight some of the consumer protections established by the Affordable Care Act (ACA). Her testimony comes in response to legislative proposals currently being considered to repeal “grandfathering” regulations and the medical loss ratio (MLR) provision, stripping many consumer-focused protections from health insurance coverage.
The testimony notes that this proposed change to the grandfathering rules would put consumers in jeopardy as it calls for a blanket exemption from essential ACA requirements. Many of the most popular provisions of the law – including health insurance that does not discriminate on the basis of pre-existing conditions, ensures families can maintain coverage for their young adults, and lowers health costs by allowing for preventative services at no out-of-pocket cost – would not be required of a grandfathered plan.
“We constantly receive complaints of rising premiums, lost benefits, and drastic cost-sharing increases, but we’ve yet to hear from any of those same consumers arguing to keep a plan after coverage has been reduced or premiums increased,” said Lynn Quincy. “This proposal not only broadens the definition of a grandfathered plan, but it drastically expands the list of consumer protections that would no longer apply.”
Grandfathered plans, or health plans that existed on the day the healthcare law was enacted and haven’t undergone significant modifications, are treated differently under the current law and are exempt from several protections. However, under current law, grandfathered plans must comply with many of the most important protections, such as covering young adults, providing the essential benefits package in 2014, and better appeal rights when there is a coverage dispute..
Additionally, Consumers Union strongly opposes any legislation that would repeal the Medical Loss Ration (MLR) provision which ensures more of a premium dollar goes to pay for healthcare, as opposed to administrative expenses.
Quincy notes, “A high medical loss ratio simply means that more of consumers’ dollars are going towards their healthcare and not towards insurance providers’ inflated administration costs. Many states have enacted similar MLR provisions, and no state has reported that the rule undermined the state’s insurance market. There is already evidence that the federal rule is working to improve value for consumers. These proposals would raise premiums for consumers and should be rejected.”
The current MLR rule has already caused insurers to scale back their premium rates. In just one example, Aetna lowered rates by as much as 19 percent for 15,000 Connecticut customers to bring premiums in line with the MLR rule, while a GAO report found that other insurers plan to either reduce premiums or fail to increase them. Additionally, a recent inquiry by the National Association of Insurance Commissioners (NAIC) failed to find a significant negative impact on insurance brokers’ overall compensation, despite a higher MLR standard.
The MLR standard authorized by the ACA is 80% for the individual and small group market and 85% for the large group market, though states can apply for adjustments if the standard would be detrimental to the market.
“We’ve seen first hand the extraordinary relief this law has provided to parents like Bill and Melinda Strong, whose daughter Gwendolyn was diagnosed at birth with a rare-condition called Spinal Muscular Atrophy leaving her nearly paralyzed and in need of medical care that quickly approached their plan’s lifetime limit. Relief provided by the ACA’s consumer protections allow their family to focus solely on caring for Gwendolyn and improving her quality of life. Proposals like these increase the difficulty families face in accessing these important consumer protections. Stories like Gwendolyn’s are why these efforts to weaken the consumer protections of the Affordable Care Act should be opposed,” said Quincy.
The hearing before the House Energy and Commerce Health Subcommittee is scheduled for 10:30 AM on Thursday, September 15th. For more information, please visit www.energycommerce.house.gov.