WILLMAR -- Stronger consumer protection against unreasonable premium increases is among the first changes the public will see as the federal health care reform law takes effect.
Insurers will have to jump through new hoops if they want to raise their rates. They will also be held more accountable for spending on direct health care services for their subscribers.
"We've leveled the playing field a bit," said Rep. Jan Schakowsky, D-Ill.
The changes were outlined Friday in a national teleconference with Schakowsky and Sen. Al Franken, D-Minn., on some of the insurance market reforms contained in the bill. It was the first in a series of teleconferences being organized by Families USA, a nonprofit health care consumer advocacy group, to help explain the new law to the public.
Franken and Schakowsky said the law should help curb the worst practices by health insurers, such as rescinding coverage or implementing large rate increases.
"We are concerned, as areour constituents, about the sky-rocketing premium increases," Schakowsky said.
Insurers now will be required to justify proposed rate increases before they take effect. Schakowsky also has co-authored a House bill that would provide federal authority for blocking or modifying rate increases that are deemed unreasonable. The measure would extend protection to consumers in states where insurance commissioners have no authority over the rate-setting process.
In another significant measure, insurers will be required to maintain a minimum medical loss ratio. This will limit the percentage of money from premiums that can be spent on administrative costs, CEO salaries and profits and force insurance companies to focus their spending on actual health care.
In the large group market, insurers must spend at least 85 percent of premium money on health care services for their subscribers. In the small group market, it's 80 percent.
Franken said the average ratio in Minnesota is 91, well above the target. But for some health plans in other states, it's as low as 30.
How this ratio will be defined and calculated will be key, Franken said. Public comment is currently being accepted by the U.S. Department of Health and Human Services as it formulates the regulations.
"Obviously our work isn't over. There are a lot of implementation details ahead of us," Franken said.
Although the health reform legislation won't eliminate increases in health insurance premiums, it should help slow the rate at which they're going up, he said. "That was the important thing. If we did nothing, it was just going to be unsustainable."
Several other provisions of the bill take effect this year as well, including subsidies to help small businesses purchase health plans, coverage of Medicare preventive services, and relief from the "doughnut hole" in the Medicare Part D prescription drug program.
Franken said that as he has traveled around Minnesota, he has talked to many people who are unaware that parts of the reform bill are having almost an immediate impact.
Among the public, there's a lack of information and "downright mischaracterization" of the bill, Schakowsky said.
"There's going to be an aggressive effort to explain the bill to people," she said.