Controversial Health Plan Provision Aims to Protect Consumers

President Obama today outlined his proposal for comprehensive health care reform, three days before he'll host Democrats and Republicans at a televised summit on the topic.  The plan is available on the White House website for public review, and Republicans have been invited to post their own ideas for reform on the page as well.  But while the White House has maintained its eagerness to make the most of the bipartisan meeting, Thursday's gathering is expected to be a free speech forum that's bound to include complaints from both sides of the aisle.

One of the proposals Republicans are expected to take aim at is the idea of a rate hike authority that will oversee insurance premiums.  The panel would identify excessive increases and report them to the Secretary of Health and Human Services, who could then force insurers to revise their rates.  White House Press Secretary Robert Gibbs dismissed questions about whether the establishment of such a board would translate to a government takeover of health care.  He pointed to a recent move by California's Anthem Blue Cross to jack up insurance premiums to 39 percent, as an example of how consumers are being taken advantage of.  "We've certainly seen a lot of the coverage around individuals that received those letters," Gibbs told reporters.  "We know that this is not the first time, and I doubt it will be the last time -- unless we get comprehensive reform in place -- that people will see in the individual market rate increases near 40 percent."  Gibbs implied that the rate authority would be set up temporarily, until health care exchanges were up and running, and insisted that the panel's influence would not overshadow the authority of the states. "It's not a new federal agency," Gibbs said.  "There's no new bureaucracy."

But critics warn that such regulation could end up putting consumers at risk.  "You cannot cram down the rates for premium rates and at the same time get the same level of medical services," says Robert Moffit of the Heritage Foundation.  "Basically what is going to happen is what often happens in Medicare and Medicaid; there will be reduced access to services."  Moffit says that the idea of a panel to monitor premiums may sound like good news for patients who are concerned about costs, but in the end an individual may end up paying out of pocket because insurers will need to make up for lost revenue.  "The government could set rates below what the market determines any given point in time. And once that happens it means that the consumers will be on the receiving end of shortages."