Kennedy on Insurance Market Reform in National Health Reform

KENNEDY ON INSURANCE MARKET REFORM IN NATIONAL HEALTH REFORM

As Entered into the Record

United States Senate Health, Education, Labor, and Pensions Committee Hearing

The cost of health insurance has been soaring out of control in recent years and shows no sign of slowing. Family health insurance premiums have increased by 80 percent since 2001, compared with a 24 percent increase in overall inflation. Studies estimate that 46 million Americans have no health insurance at all, and millions more are underinsured.

As the economic crisis worsens and the unemployment rate rises, the number of uninsured citizens will grow. In February 2009, more than eight percent of Americans were unemployed and 1.1 million of them will become uninsured with each one percent increase in unemployment. To guarantee that all Americans have access to quality medical services, we clearly must reform the current health insurance market.

Our goal must be to provide affordable health insurance for all Americans. Most health insurance markets do not work well today for most Americans. Small employers with fewer than 50 workers lack bargaining power to negotiate affordable prices with insurers. As a result, these employers either can't provide insurance, or pay huge prices for coverage. Healthy individuals who can afford to pay the cost may be able to purchase private plans, but Americans with health problems - even minor conditions - often cannot find an insurer who will sell to them, or will sell at an unaffordable price.

No one is immune from the growing cost of health insurance and medical care. Large employers who historically provided full benefit packages now struggle to afford the cost of any insurance for their employees.

To reform our system, we must change how we provide and administer health insurance. In most states, insurers legally avoid providing coverage for the sick, while competing only for the healthy. In national health reform, insurers must interact with consumers efficiently, respectfully and transparently. Health insurance should help people become healthy and stay healthy. In a reasonable health insurance market, insurers should compete on price, value and patient satisfaction, not on avoiding those in need.

Massachusetts' recent success in achieving near universal coverage shows the promise of sensible reform. A key component is the requirement that all individuals must have health insurance and that insurance must meet a minimum standard of coverage. To assist those who have difficulty finding affordable health insurance, a state-wide "Insurance Connector" was created to pool individuals together. The plan assists low-income residents with a sliding-scale subsidy to ensure affordability. Although the nation has many diverse health insurance markets, Massachusetts' reform shows that insurance market reforms can make a large difference - insurance coverage has risen from 94% percent to when the plan took effect in 2006 to over 97% percent today.

National surveys show that the primary reason that citizens and their families are uninsured is the high cost of health insurance. In large part, coverage is too expensive because of out-of-control medical spending that consumes more than 16 percent of our national economy. For many Americans who do not have access to employer-sponsored insurance and who face health problems, insurance may not be available at any price. For Americans fortunate enough to have insurance, premiums take ever larger portions of paychecks, and rising deductibles, co-insurance and co-payments shift more of the financial burden of sickness to the patient.

We can no longer stand by while these problems grow. At this unique time in history we must seize the moment and move forward with genuine and comprehensive health reform for all Americans. To his great credit, President Obama has made such reform an early and high priority of his Administration, and the momentum is clearly with us for the first time in many years.

I commend Senator Jeff Bingaman for his impressive leadership on the HELP Committee in addressing these urgent needs. I'm hopeful that a major result of the current reform effort will be health insurance markets in every part of the nation that work for every consumer. Now is the time for Congress and the Administration, business groups and labor and consumers, health care providers, and the insurance industry to join together to create meaningful reform of our dysfunctional health insurance system.

Source