Texas Sunset Advisory Commission hears testimony on inadequacy of state oversight
of health insurance

CPPP report calls for pro-consumer reforms to TDI regulatory power

By Jonathan Nelson

Texans need a healthy insurance marketplace that balances the needs of consumers and industry. That’s what the Texas Sunset Advisory Commission heard from a broad coalition of organizations including consumers, physicians, religious institutions, seniors, patients, homeowners, labor, and others at a public hearing on June 24, 2008. The commission is undertaking the sunset process of the Texas Department of Insurance, among other agencies, and will submit a final set of recommendations to the state Legislature later this year.

TAFP joined the coalition in calling for the sunset commission to recommend that the state enact insurance rate oversight and strengthen TDI’s mission.

According to a recent report by the Center for Public Policy Priorities, the health insurance market in Texas lacks consumer protections that could make private insurance more affordable and accessible. “The private health insurance market in Texas leaves one in four uninsured, generates the third highest premium increases in the nation, and produces one of the lowest rates of coverage through employer-sponsored insurance in the nation,” CPPP says in the report. “Currently, TDI does not have the tools it needs to foster a healthy marketplace or help consumers access health insurance coverage.”

Staff for the sunset commission released recommendations in late May, urging that the Legislature give TDI the power to regulate preferred provider organizations. Four out of five insured Texans are covered by PPOs and while consumer advocates believe giving TDI authority over these entities is an important reform, it may not be enough.

In a letter to the sunset commission, Stacey Pogue of CPPP writes that TDI’s current regulatory powers do not “address consumers’ primary barrier to accessing quality health insurance—cost.”

Among other reforms, the CPPP report calls for the state to authorize TDI to ensure health insurance rates are fair to consumers by instituting a mandatory rate review process and by setting minimum medical loss ratios. A medical loss ratio is the percentage of premiums collected that an insurer actually spends on medical services. Currently TDI does not collect this information from insurers, much less regulate how much of the premium insurers can claim as profit.

“We will not sacrifice profitability for membership.”

So said WellPoint President and CEO Angela Braly on a conference call with analysts, according to a report in the May 19, 2008 edition of AMNews. Some of the nation’s largest health insurers have reported lower-than-expected earnings in the first half of the year but they are not willing to slow the rate of premium increases to keep members. As AMNews reporter Emily Berry pointed out, Braly made her comment during the Robert Wood Johnson Foundation’s Cover the Uninsured Week.