Close insurance loophole

Individual policy holders aren’t the only people being hit by excessive hikes in the cost of their Anthem Blue Cross and Blue Shield health-insurance premiums. Last week the city of Chico revealed that Blue Shield had hiked its employee premiums by more than 40 percent, an astonishing increase. As a result, the city wants to self-insure through the California State Association of Counties.

That news comes in the wake of an April 2 announcement that WellPoint, Anthem Blue Cross and Blue Shield’s parent company, had boosted its CEO’s compensation 51 percent last year, from $8.7 million to $13.1 million.

Outrage at Anthem’s double-digit rate increases while its executives raked in the dough helped push along national health-insurance reform in Congress. But it didn’t nudge hard enough to enable legislators to get the votes to establish a national authority that would regulate insurers’ premiums.

That’s one of the glaring weaknesses of the reform legislation—“a very big loophole,” Sen. Dianne Feinstein called it—and insurers are moving quickly to take advantage of it. The result, some reform supporters worry, could be a backlash against the health-care overhaul.

As it stands, the responsibility for regulation remains with the states. California law, like that of most states, is strong when it comes to regulating auto and property insurance but weak on health insurance. That’s why there’s now a bill in the Assembly (AB 2578) that would establish regulation authority here.

More significant, Feinstein and Rep. Jan Schakowsky (D-Ill.) are pushing legislation to increase both federal and state authority to prevent insurers from hiking rates excessively. Congress needs to move on this as soon as possible.