Would Also Allow Banking and Insurance Commissioner To Reject Excessive Rate Increases
TRENTON – Senate Majority Leader Barbara Buono (D-Middlesex) today announced that she will introduce legislation to create a consumer watchdog to combat continuously rising health insurance costs that small businesses and families have been forced to shoulder at a time when business expenses have increased and wages have remained stagnant.
“New Jersey’s families and businesses have struggled under the crippling burden of soaring healthcare premiums for far too long. It is time that residents had a state-level advocate working on their behalf to keep costs down,” Buono said. “This legislation will ensure the state’s regulation of insurance is rigorous and transparent, and that the interests of working families are represented and no longer overshadowed by the interests of big business.”
Current state law allows health insurance carriers participating in individual and small employer markets to set and increase rates merely through an informational filing with the state. The law does not require approval from the state Department of Banking and Insurance, nor does it give the Division of Rate Counsel jurisdiction over health insurance matters. The Senator’s legislation would require that insurance carriers obtain prior approval from the DOBI commissioner for a rate increase, and would give the commissioner explicit authority to reject proposed rate changes upon findings that they are unfairly discriminatory or excessive. The bill would also create a state-level consumer watchdog to advocate on behalf of residents by expanding the jurisdiction of the Division of Rate Counsel.
“Empowering the Division of Rate Counsel to advocate on behalf of New Jersey residents will be a tremendous step forward in the effort to protect health insurance consumers, who have seen rate increases far outpace the growth in their wages in recent years,” said Buono. “With this legislation, we are effectively creating a health insurance watchdog for the people of this state.”
The bill will require the DOBI commissioner and the Division of Rate Counsel to jointly hold a public hearing on every request by a carrier to increase premiums for any contract or policy in the Individual Health Coverage (IHC) Program or New Jersey Small Employers Health (SEH) Benefits Program market. The purpose of the hearing would be to receive comments from the public to assist the commissioner in approving, disapproving or modifying the request for an increase. The Division of Rate Counsel, which currently has no jurisdiction over health insurance rates, would be authorized under the bill to represent the public interest in proceedings that pertain to changes in rates for any health plans offered in New Jersey. The bill would also require that information about premium increases, including an explanation of how carriers report and calculate health insurance premiums, be posted on the Department of Banking and Insurance website.
“The state’s lax regulatory system has allowed providers to impose continuous rate hikes on families and small businesses, leaving them with the burden of covering exorbitant health care costs at a time when their own budgets are shrinking,” said Senator Buono. “This legislation will provide strict oversight over rate changes to ensure that residents are being treated fairly. In addition, it will give the commissioner the ability to reject excessive increases. This should be welcome news for policy holders, because it will mean that insurers will no longer hold all the cards when it comes to setting rates.”
According to the Kaiser Family Foundation/Health Research & Educational Trust 2011 Employer Health Benefits Survey, annual premiums for employer-sponsored family health coverage increased to $15,073 this year, up 9% from the previous year. On average workers pay $4,129 and employers pay $10,944 toward annual health insurance premiums. Kaiser notes that premiums have increased significantly faster than workers’ wages and general inflation. Since 2001, family premiums have increased 113%, compared with 34% for workers’ wages and 27% for inflation.
The bill will be introduced at the next Senate quorum call.