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March 8, 2010


Hon. Charles Schumer (sent to all members of the WNY Congressional delegation)
United States Senate
313 Hart Senate Bldg.
Washington. DC 20510

Dear Senator Schumer:

On behalf of the 2,500 employer members of the Buffalo Niagara Partnership, I urge you to oppose President Obama’s proposal to create a new federal “Health Insurance Rate Authority” as part of the healthcare reform package. The inclusion of federal “rate review” cannot deliver the desired results of making insurance “fair, accessible and affordable” given that the proposed authority will seek to manage health care premiums without ever addressing the real factors driving health care costs. 

There are a number of flaws in the proposal:

• Federal rate review fails to address the factors that drive up healthcare costs across the nation – namely, the rising price and increased utilization of medical services and a lack of coordination in a medical delivery system operating under a faulty reward system that values volume above all else.

• A federal health insurance rate authority is a one-size-fits-all approach that overrides state authority; ignoring the unique situation in each state market. Veteran state insurance commissioners maintain that that the federal government will not have adequate resources to replicate the experience of the thousands of state regulators that currently scrutinize premium increases.

• Federal rate review has the potential to become a politicized process in which both state and federal regulators will face increasing political pressure to artificially reduce premiums leading to price controls on providers, drugs, medical devices and increased restrictions on care. Artificially-reduced premiums without commensurate reduction in health care costs would lead to unpredictable and ungainly rate increases at politically expedient times. The Partnership has opposed the prior approval of health insurance rates at the state level for this reason; similar policy at the federal level would be equally as volatile.

As Congress tries to reconcile the House and Senate versions of comprehensive healthcare reform, I encourage you to bring the apparent flaws in the President’s proposal to the attention of your Senate colleagues. Given that federal rate review represents “regulatory overkill” in light of the multitude of federal rules limiting premium increases already included in the plan, I urge your opposition to this provision.  There are ways to responsibly improve accountability and increase affordability in the health insurance industry without the creation of a federal rate authority that will attempt to manage a sector of health care that has always been under the purview of state – not federal – oversight.

Sincerely,

Andrew J. Rudnick