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Feinstein’s National Health Insurance Regulator To Make Obama’s Compromise Proposal

A few people took issue with my description of Dianne Feinstein as a “radical moderate” in this story about her bill to create a national health insurance regulator to undergo rate review whenever an insurer hikes premiums. I didn’t really put that in the context of being sarcastic the way I should. But what I meant is that a lawmaker with little interest in populism was using something in the news impacting her constituents to take it out on everybody’s favorite villain, health insurers. Only she was also creating something that remedied one of the more glaring omissions in the bill, the lack of federal oversight as a backstop to the state-based framework.

Well, Feinstein’s fellow radical moderate, Barack Obama (again, sarcasm), has picked up on the proposal and will apparently include it in his health insurance bill presented to the nation in advance of the bipartisan summit.

President Obama will propose on Monday giving the federal government new power to block excessive rate increases by health insurance companies, as he rolls out comprehensive legislation to revamp the nation’s health care system, White House officials said Sunday […]

By focusing on the effort to tighten regulation of insurance costs, a new element not included in either the House or Senate bills, Mr. Obama is seizing on outrage over recent premium increases of up to 39 percent announced by Anthem Blue Cross of California and moving to portray the Democrats’ health overhaul as a way to protect Americans from profiteering insurers.

Congressional Republicans have long denounced the Democrats’ legislation as a “government takeover” of health care. And while they will likely resist any expansion of federal authority over existing state regulators, they will face a tough balancing act at the meeting with the president to avoid appearing as if they are willing to allow steep premium hikes like those by Anthem.

Specifically, Obama will just pick up Feinstein’s bill, whole, and incorporate it into the legislation.

It’s fair to wonder if this will have a major impact; the individual market where most of these kinds of rate hikes happen would hopefully go away, and the exchanges already have a rate regulation and review component. This may actually stop a “Wild West”-style individual market from taking shape; if rate hikes cannot match health inflation in a way to ensure giant profits, insurers would be less likely to offer insurance to individuals outside of the exchanges. The other positive here is to give the federal government a role in regulating insurance, a role which can expand over time. Obviously, Republicans live to decapitate federal regulatory agencies, but the status quo of the health care bill, to leave it to the states, is unacceptable and unlikely to work effectively, so a federal regulator at least offers another bite at the apple.

The big question I have is the fact that it’s not germane for reconciliation. CBO will probably decline to score such a federal rate reviewer, meaning it would be vulnerable to the Byrd rule. Incorporating it into the White House legislation is nice, but it cannot pass within the comprehensive bill.

However, it can pass as standalone legislation. And as the article notes, it would create a pretty nice little vote to make Republicans take. Few bills would offer a choice between the people and the health insurance industry so cleanly.

Senate Republicans are trying to frame this as an admission that the comprehensive bill wouldn’t stop large rate hikes. But that’s a temporary tactic, and if Democrats propose a solution, the opposition would have to choose a side.

UPDATE: The Hill reports that the bill will be released at 10AM ET Monday.

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David Dayen

David Dayen

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