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Illinois Lawmaker On How Insurance Industry Tried To Kill Reform Bill

During the White House Health Summit, AHIP CEO Karen Ignagni told the president, “we understand that we have to earn a seat at the table…you have our commitment, to play, to contribute and to pass health care reform this year.”

Indeed, this year, the industry has portrayed itself as a proponent of comprehensive health reform and its health care proposal has generated a slew of positive media coverage. But some still question the industry’s sincerity. Will AHIP support health care reform that lowers the industry’s profit margins, and will the insurance industry sacrifice profits for progress, these critics ask?

The industry’s opposition to Illinois State Representative Gregg Harris’ (D-Chicago) effort to pass legislation regulate the individual insurance market may begin to answer these questions.

Recently, the Illinois House passed ‘The Health Insurance Consumer Protection Act (House Bill 3923),’ a bill designed to regulate the state’s ‘Wild West’ individual health market. The act requires insurance companies to “spend at least 75% of premium dollars on medical care rather than on executive salaries,” establishes an office to conduct “external independent reviews of denied claims and rate increases” and simplifies “the complicated application process for both individual and small group markets by creating a standard application.”

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ThinkProgress spoke with Harris, who explained that while the insurance industry initially supported his efforts, it opposed the actual legislation:

It’s the same kind of language they’ve talked about at the national level: “We could be supportive of some of this stuff if there was an individual mandate,” and “we’re willing to talk and negotiate and talk about parts of the bill.” But when it came time for the vote, they were out in pretty strong opposition. Every procedural trick in the book was used to stall it and derail it on the last day, but we got it through.

Listen:

Reform on the national level “is going to be very difficult,” Harris explained. “You’re really going to have to stand up to some powerful interests to get done and people are going to have to make a decision. Where are your votes going to be as a legislator? Are they going to be to protect consumers, or are they going to be to protect an industry giant?”

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The Health Insurance Consumer Protection Act will now move to the Senate where, Harris predicts, “the opposition will be just as strong.”

Transcript:

I basically introduced this bill after reading a Families USA study that showed consumer protections for health insurance purchasers in the state of Illinois were among the worst in the entire United States. Families and small businesses basically had no protections when purchasing health insurance here. The bottom line is you had a situation where a lot of people described Illinois as one of the wild west states, as far as no regulation to protect consumers. So the biggest thing for me is protecting the people who buy health insurance and making sure they’re getting treated fairly when they make that purchase and then when they later need to obtain health care.

So the bill that passed creates a minimum medical loss ratio law, which says that 75 percent of insurance premiums collected have to be spent on providing health care to customers. It establishes a definition of medical necessity for mental illness, strengthens the oversight and regulatory powers of the Office of Consumer Health Insurance here in the state, and mandates the utilization of standardized applications for individual and small group purchasers of health care insurance.

If you look at the list of the opponents of this legislation, it was every insurance company doing business in the state of Illinois. They were saying this should not be done by rule, you know, everything about the application should be spelled out in the law; and I’m sure that if I had spelled out everything that was going to go into the application in the law, they would have said, ‘oh, we should have done this by rule.’ They were saying that requiring them to spend 75 percent of the money they collect for health insurance premiums on actual health care would force them to leave the state and stop doing business because it was an unrealistic expectation, even though in 15 other states companies are doing just that. And if you look at they’re SEC filings on their 10K reports, they’re all either meeting or exceeding that standard anyway, but they just couldn’t I guess support writing that into the law.

It’s the same kind of language they’ve talked about at the national level: “We could be supportive of some of this stuff if there was an individual mandate,” and “we’re willing to talk and negotiate and talk about parts of the bill.” But when it came time for the vote, they were out in pretty strong opposition. Every procedural trick in the book was used to stall it and derail it on the last day, but we got it through.