By Sam Baker - 05/11/11 08:25 PM EDT
"It is important to avoid an arbitrary and subjective rate review process that can easily become politicized," America’s Health Insurance Plans said in a statement. "Artificially capping premiums while allowing medical costs to continue to soar will destabilize the market and put at risk the coverage that families and employers rely on today."
But the healthcare law might not work without rate approval authority, Consumer Watchdog founder Harvey Rosenfield said. He pointed to the section of the law that requires insurers to spend 80 to 85 percent of their revenues on medical costs. Because the policy limits the percentage of revenues that can go toward profits, he said, insurers focused on their bottom line won't be as eager to control their spending on medical costs.
The policy, he said, "creates a perverse incentive that only regulation of premiums can unwind."