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FOR IMMEDIATE RELEASE: July 15, 2009

SENATE FINANCE DEMOCRATS SUGGEST MAKING PROFIT-HUNGRY HEALTH INSURERS PAY FEE TO HELP COVER COST OF HEALTH CARE REFORM


Schumer, Menendez, Stabenow Say Congress Must Rein In Insurers By Tightening Regulation, Increasing Market Competition

Also Endorse New Fees On Insurers To Help Defray Cost Of Health Care Reform—Industry Has Been Big Part of Problem, Now Must Be Part Of Solution

Since '01, Health Insurance Industry Profits Have Soared 428% While Premiums Have Doubled

WASHINGTON, DC—U.S. Senators Charles E. Schumer (D-NY), Robert Menendez (D-NJ), and Debbie Stabenow (D-MI) today demanded that the private health insurance industry accept tighter regulation, increased competition and new fees in order to ensure a successful overhaul of the health care system.

 

While many of the proposed solutions are already incorporated in the bill set to emerge from the Senate Finance Committee, the idea of imposing fees on health insurers is under consideration, but unresolved. Schumer, Menendez and Stabenow endorsed the approach Wednesday, saying it was a worthwhile option that would ensure that the health insurance industry contributed to the cost of reform. The senators said they were not drawing lines in the sand over the design of the fee, but suggested that, depending on how it was designed, it could raise potentially $100 billion. The senators said that since private insurers stand to gain the most from the influx of millions of consumers that would be generated by health care reform legislation, the industry should kick in for part of the cost.

 

“Our broken health care system is working all too well for many private health insurers,” Schumer said. “They need to become a better partner as we work to enact a health care reform bill without adding to the deficit. It only makes sense that the health insurance industry, which stands to gain over 40 million new consumers under a reformed system, should pay its fair share.”

"It’s clear, and disturbing, that private insurers have used the market power they have gained to boost their bottom line, regardless of the cost to our families. Meanwhile Americans find themselves with fewer and fewer health insurance options at higher and higher costs. The time has come for insurance companies to step up to our health care challenge. It is time for them to be part of the solution,” Menendez said.

 

“Insurance companies have made a lot of money off the current system while too many families have been unable to afford the health care they need,” said Stabenow. “That’s why I’m working with my colleagues in the Senate Finance Committee to rein in consumer costs, tighten regulation and increase market competition as we finish health care reform. Health care needs to be for patients, not profits. We need a uniquely American health care system that guarantees insurance companies pay their fair share, so families get the health care they need at a price they can afford.”

 

Since 2001, profits at the top 10 health insurers rose 428 percent, according to Securities and Exchange Commission filings compiled by the advocacy group, Health Care for America Now. Over that same span, the average premium has doubled to $12,680. Based on that data, the senators suggested health insurance companies have an interest in preserving the status quo. While the pharmaceutical and hospital industries have announced cost-cutting agreements with the White House and Senate Finance Chairman Max Baucus, health insurers have not yet stepped forward in a similar way, even though they stand to gain 40 million potential new customers under the proposed health care bill.

 

The senators demanded that the health insurance industry become a stronger partner in the effort to enact comprehensive reform. Besides submitting to the fees, the senators reiterated their support for other measures that would compel insurers to abandon the types of practices that put profits ahead of patients. They endorsed, as a way to crack down on insurers, new requirements such as “community rating”, which will prevent insurance companies from charging some consumers more based on health status and “guaranteed issue,” which means anyone seeking insurance must be made an offer. The senators also touted the proposed insurance exchange that would exert competitive pressures on all insurers.  

 

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