As one of the provisions of the Affordable Care Act, the nation’s insurance companies will be required to spend at least 85% of the money they collect from premiums on improving the quality of medical care. However, the law does not designate any governing body as the regulatory of the mandate. This has led Senator Dianne Feinstein of California to propose new legislation that would give the Secretary of Health and Human Services regulatory authority over proposed rate increases of 10% or more.
Feinstein asserts that insurance premiums are rising out of control, claiming that rates have risen at three times the rate of inflation. Furthermore, many of the largest insurance companies in the nation have reported a 16% increase in profits this year. “While profits and paychecks for CEO’s have increased, the amount of money insurers paid out to health care has gone down,” she says. “Something is wrong with this picture.”
The sudden spike in coverage rates may be due, in part, to a provision of the Affordable Care Act that requires each citizen to carry health insurance by 2014. A similar rate hike occurred in the auto industry some time ago after the federal government mandated that all drivers should carry insurance coverage. Without proper regulation, says Feinstein, these insurance companies stand to make a huge profit at the expense of citizens.
The Democrats have also sponsored a similar bill from Assemblyman Mike Feuer, which gives regulatory authority to state insurance commissioners.