Consumer Watchdog – President Obama, Sens. Kennedy & Baucus: Don't Buy Insurer "Compromise" for Bush-era Plan to Gut State Consumer Protection Laws

Washington, D.C. -- President Obama and U.S. Senate health care reform leaders must not override state consumer protection laws as suggested by health insurers last week, a move long-supported by insurers and the Bush Administration said Consumer Watchdog in a letter to the president and senators.  The hard-fought state laws enacted in nearly every state over the last 10 years were made necessary because Congress failed to enact Patients' Bill of Rights legislation.

Download Consumer Watchdog's letter here.

In the letter, Consumer Watchdog wrote:

"Federal regulation would be a boon to the industry, and has long been on the insurer’s wish list because over the last decade almost every state has developed comprehensive patient protection laws that the insurers loathe.

"Insurers would like to take advantage of the moment of reform to eviscerate HMO Patients’ Bill of Rights laws enacted in nearly every state and replace them with window-dressing federal rules that clear the way for the worst of the industry’s practices."

The insurers' proposal was floated last Tuesday during the U.S. Senate Finance Committee by Karen Ignagni, CEO of the HMO and health insurer lobbying organization, America's Health Insurance Plans.

Consumer Watchdog called the insurers' proposal to kill the “public option” to private insurance coverage—the reform that the industry hates most because of its value to consumers—in exchange for new federal regulation of the industry a "false compromise."   

In the letter, Consumer Watchdog wrote:

"Insurers are not conceding a thing.  They are trying to turn the squelching of a beneficial public option into a double victory.  They need all of you to play along with the charade in order to succeed in killing state patient protections as well as any government competitor.  If you allow the insurance industry to prevail in this deception, the worst public fears about insurers’ lobbying power in Washington will be proven correct."

A similar window-dressing federal regulation scheme was last brought forward in Senator Mike Enzi’s (R-WY) bill, S. 1955, in 2006 which would have gutted HMO Patients' Bill of Rights laws and state common law access to courts by enacting President Bush’s promised “Association Health Plans” expansion.

In the letter, Consumer Watchdog wrote:

"The Enzi bill was described in terms similar to those used by Ignagni... to describe the federal 'standards' the insurers are willing to accept if the public option is taken off the table.  Such 'harmonization' at the federal level of 'inconsistent' state laws will result in lowest common denominator regulations enforced from an impossible distance.  Done the industry’s desired way, an individual’s state common law right to sue an insurer for even the most egregious misbehavior would also be erased."

Ignagni has also promised the industry’s agreement to cover all Americans regardless of health, and not to charge more based on characteristics like health status or gender. Even these apparent concessions are far from hardships for the insurance industry, said Consumer Watchdog, in the context of their demand that all Americans be required to purchase their product.

* Read Consumer Watchdog's analysis of health insurer and drug company contributions to members of Congress.  Senator Max Baucus (D-MT), chairman of the Senate Finance Committee, received more campaign contributions from the health insurance and pharmaceutical industries than any other current Democratic member of the House or Senate; the third highest contributions of any member of Congress.

* Read about a recent national poll that found that 65% of voters support giving every American of any age the option of joining Medicare -- 60% are willing to pay more in payroll deductions for this option.

* Read about a national poll that found, by contrast, that only 16% of U.S. voters support, and 53% oppose, the insurance industries' plan of requiring every American to provide proof of private health insurance or face tax penalties or other fines.

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Consumer Watchdog is a non-profit and non-partisan consumer advocacy organization with offices in Washington, D.C. and Santa Monica, California.  For more information, visit us on the web at: www.ConsumerWatchdog.org