Healthcare Reform News Conference in Normal, IL

Illinois and Health Reform: What It Means and What We Have Left to Do

This past week was historic for our country.


The passage of the new health reform law is a great step forward. It is an expression of our commitment to ensuring that every Illinoisan and every American have the best health care possible.


And it couldn’t have come too soon. Our nation’s healthcare crisis is pricing more and more people out of coverage.


Over the past decade, family health insurance premiums for Illinois’s workers rose five times more quickly than median earnings.


Illinois families just cannot keep up.


Benefits to Illinois: Access to Coverage and Care


Today, in Illinois, 1.8 million people are uninsured and 2.2 million people do not have easy access to a doctor.


  • The new law will eventually provide health insurance coverage to 32 million uninsured Americans, including 1.1 million Illinoisans – either through Medicaid, or through an employer, or through an exchange where health plans compete for their business.
  • A $10 billion investment in community health centers will help create 10,000 new health centers across the country—including an additional 400 new centers in Illinois offering quality primary care.


Immediate Benefits of Reform


  • This year, the new law offers tax credits to 144,000 small businesses across Illinois to help make premiums more affordable.
  • Beginning in 6 months, health insurance plans will be prohibited from imposing lifetime limits or dropping you when you get sick.
  • Beginning in 6 months, preexisting condition exclusions for children will be banned. The parents of 3.6 million Illinois children will sleep better knowing their insurance can cover their kids.
  • This year, roughly 314,000 Medicare beneficiaries in Illinois who hit the Medicare Part D drug coverage gap or “donut hole” will receive a $250 rebate. Starting next year, they will have access to discounts on brand-name drugs, and by 2020 the coverage gap will be eliminated for both brand-name and generic drugs.


More Needs to be Done


But more needs to be done. Right here in Illinois, we have seen insurance companies increase their premiums at unbelievable rates – up to 60%.?

These increases are especially unfair when we see insurance company profits continuing to grow. ?

The profits of the 10 largest insurance companies increased 250% between 2000 and 2009, 10 times faster than inflation.


The 5 largest health insurance companies took in combined profits of $12.2 billion in 2009, up 56 % from the 2008 level.


Consumers need greater protection.


Repeal of Anti-Trust Exemption


For too long, insurance companies have had the freedom to do what they want– often at the expense of their customers.


That is why it is time to repeal the McCarran-Ferguson antitrust exemption for health insurers.


There are only two industries in America that are exempt from federal antitrust laws: major league baseball and the insurance industry.


Baseball players aren’t afraid of competition, but the insurance companies sure seem to be.


For decades, the insurance industry has operated under virtual immunity from federal antitrust laws. And during that time we have seen premiums go up and competition go down.


Under the McCarran-Ferguson law, federal antitrust authorities cannot investigate or take action against insurers, not even for blatantly anti-competitive conduct like price-fixing or market allocation.


We need to let the Justice Department and the Federal Trade Commission use their resources to help keep insurers honest. We need to repeal McCarran-Ferguson in order to ensure a competitive market for health insurance.


For procedural reasons, we couldn’t do this on the reconciliation bill, but the House passed a bill to do this by a 406-19 vote and it’s time for the Senate to finish the job.


Insurance Rate Review


The second thing we need to do is establish a Health Insurance Rate Authority to review premium increases, require insurance companies to justify unreasonable rate increases, and deny those increases that are excessive or discriminatory.


The new law we just passed takes an important step to address excessive insurance industry profits.


Beginning in 2011, insurance companies in the individual and small group markets will be required to spend at least 80% of their premium dollars on medical care, and no more than 20% on administrative overhead and profits.


In the large group market, the requirement will be that 85% of premiums be devoted to medical care.


Insurers that don’t comply would be required to pay rebates to customers. This means the money would go back into your pocket and not the pockets of insurance company executives.


But more oversight is needed. The insurance companies will gain at least 16 million new customers when the reforms are fully implemented, and we need to make sure they charge fairly.


Some states have already set up rate review panels of their own.


Since 2008, at least 25 states have established some form of prior approval process for premium increases. And the process is working.


North Dakota has reduced insurers’ proposed rate increases 37% of the time since 2007.


Maryland blocked a 46% increase in premiums. New Hampshire cut a proposed 100% rate increase to 12.5%.


But many states – like Illinois – don’t have any rate review authority, and others lack the resources or political will to keep insurers in check.


The new Health Insurance Rate Authority panel we proposed would include consumer representatives, insurance industry representatives, physicians, health economists and actuaries.


States would continue to have the authority to take the lead on rate reviews if they choose to do so, but the American people will be able to have some peace of mind in knowing that if their state is not doing the job to protect the best interests of consumers, the federal government will step in.


This won’t run insurance companies out of business; it will simply ensure that consumers have someone looking out for them.


We couldn’t do this in the reconciliation bill, so we will look for other opportunities to act on it.




The stories you will hear today are stories I’ve heard too many times across the state. Stories of real people who face outrageous insurance premium increases; real businesses that have to consider dropping coverage because it is too expensive.


Health reform is an ongoing process and we have more work ahead of us. I hope you’ll stay involved. With your help, we’ll continue to take important steps forward toward the goal of affordable health care for everyone.


Richard J. Durbin
United States Senator