March 29th, 2010

Writes the Times-Tribune in an editorial:

Health insurers generally haven’t fared well in analyses of their role in the fractured American health care system, scrutiny that became intense as the national health care reform bill moved toward passage.

Soon after the White House and congressional negotiators removed the competition-promoting “public option” from the national health care reform bill, a host of insurers proved the need for the fallen measure by jacking up premiums by double-digit percentages.

Even before the national health care reform effort reached full steam, the Pennsylvania Insurance Department started an in-depth assessment of competition, or the lack of it, in the commonwealth’s health insurance market.

The review was prompted by the merger attempt of the state’s two largest health insurers, Highmark Inc. of Pittsburgh and Independence of Philadelphia. Insurance Department regulators estimated that the combined entity would control more than 70 percent of the state health insurance market.

That analysis raised the general question about whether there is a lack of competition statewide and within regions of the state and, if so, how that affects health insurance pricing.

Insurance Commissioner Joel Ario began a review of the insurance markets about seven months ago. Last week, Highmark filed a lawsuit claiming that the Insurance Department lacks the authority to conduct such a review.

Highmark specifically is concerned about Mr. Ario’s review of its licensing agreements, contractual obligations with other companies.

Mr. Ario, who not coincidentally is the first commissioner in the history of the Insurance Department with a background in consumer advocacy rather than the insurance industry, insisted that the department has the legal authority to conduct a competition review.

On its face, Highmark’s claim that the Insurance Department cannot assess the state of competition in the insurance marketplace is extraordinary. But this is Pennsylvania, where special interests often have been allowed by obedient lawmakers to craft the rules covering their own regulation.

If a court finds that the Insurance Department lacks the authority to conduct a market analysis on behalf of citizens, the Legislature should be prepared to immediately provide the required authority.