As expected, the 2010 Patient Protection and Affordable Care Act (PPACA) has had a dramatic impact on the American health care system. One of the more admirable objectives deeply entrenched in health care reform is the establishment of a clear and understandable infrastructure so that its many moving parts and pieces can seamlessly coexist under proper supervision. To this effect, at the end of 2010, the federal government published proposed regulations addressing health insurance rates, including strict disclosure and careful review of any significant price adjustments by insurers.
Focusing on the exorbitant 131 percent increase in health insurance premium rates for families since 1999, these reform-based regulations required all rate increases of 10 percent or more to be publicly disclosed and justified as of 2011. With an eye to the future, PPACA further dictated that by 2012, each state shall be responsible for setting and enforcing its own rate threshold to reflect appropriate cost trends and other meaningful date when reviewing future rate hikes. For states that fail to establish such a system of oversight, either by design or due to lack of resources, the U.S. Department of Health and Human Services (HHS) will step in and satisfy the intent of the legislation.
Such willingness on the part of the federal government to interject its influence and monitor insurance rates should not persuade individual states to dismiss the very reason PPACA had initially called upon them to police insurance companies themselves, however. Cost trends in this market widely fluctuate from state to state, and the initial 10 percent threshold is nothing more than a reasonable starting point designed to rein in the insurance companies. These regulations were not meant to stand as a final nationwide benchmark; in fact health care reform has allocated $250 million to make certain that individual states will have the necessary resources to monitor premium increases and ensure that any and all hikes are justified. To effectuate the transparency at the core of these regulations, each state must be mindful of the respective details within its territory so it can accurately balance the interests between insurers and those they insure.
Like them or not, insurance companies have become formidable entities in an industry that finds itself deeply entrenched in partisan politics. Introduced in December 2010 when HHS released its proposed regulations, Assembly Bill 52 was designed to empower California (through its insurance commissioner or Department of Managed Health Care) with the means to strike, and if necessary modify, excessive rate increases proposed by health insurers. To accomplish such a goal, AB 52 identified 18 specific data points to which California’s insurers must adhere when proposing a rate increase.
It comes as no surprise that AB 52 has been at the center of heated debate for much of 2011, fueled by the specter of PPACA and its looming deadline. Such is the system of give and take between a sovereign nation and its states that defines the federalism for which our country is known. While traditional notions of federalism encourage states to independently craft their allocation of balance, the ways in which each state opts to mold its particular helping of power often speaks volumes. By deferring AB 52, perhaps California has missed both the battle and the balance, choosing instead to sit on the sidelines during this influential chapter in the history of health care reform.
Whether PPACA will afford California another opportunity to weigh in on such a decisive issue remains to be seen. But as Congress surveys the landscape of health care reform in an attempt to scale back the national debt, and Republican party leaders call for the program’s outright repeal, it becomes increasingly important for every state in the Union to recognize the responsibility to make its voice heard., Such is the basis on which our government is founded, and such is the way that health care reform should unfold.