ME Sen. Passes NPV | Bush's Proposed Gutting of State Insurance Regulation

ME Sen. Passes NPV | Bush's Proposed Gutting of State Insurance Regulation

Thursday, April 3rd, 2008


Maine Senate Enacts National Popular Vote

On April 2nd, the Maine Senate passed a National Popular Vote bill, LD 1744, that would guarantee that the Presidential candidate who receives the most votes in all 50 states wins the Presidency.  The bill is an interstate compact, which would take effect only when states possessing a majority of the membership of the Electoral College (that is 270 of 538 electoral votes) enact similar statutes.

Significantly, the lead sponsor of LD 1744 in Maine was Senator John L. Martin, who back in 1969 established Maine's current system (shared only with Nebraska) of allocating the state's electoral votes based on which candidate wins each Congressional district.  As Sen. Martin wrote in a recent op-ed, National Popular Vote is a better system for putting "the power to elect the presidency in the hands of the people."

The Maine Senate vote follows a vote by the Vermont Senate on March 19th to approve its own NPV bill, S 270.  Both Maryland and New Jersey have enacted the NPV compact and a total of sixteen legislative chambers have now approved it as well.  The compact is awaiting the governor's signature in Illinois.

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Gutting State Regulation of Insurance under Bush Administration's Financial Oversight "Reform"

Secretary of the Treasury Henry M. Paulson, Jr.

While the financial crisis developed over a number of years in the subprime mortgage sector, federal regulators were asleep at the wheel as greedy lenders often took advantage of working families.  Worse, when states tried to step in with new state policies to tighten oversight of predatory lenders, federal officials blocked those state consumer protections, making the effects of the meltdown even worse for families. 

Killing State Oversight of Insurance:  Now the Bush Administration, led by Treasury Secretary Henry Paulson (pictured), has proposed a sweeping new proposal, its Blueprint for a Modernized Financial Regulatory Structure, to "reform" regulatory oversight of different financial sectors.  But the proposal is little more than an industry wish list that has only tangential relationship to fixing the problems that actually led to the subprime lending disaster.  Despite the fact that the insurance sector, covering everything from health insurance to disaster coverage, has been notably free of financial problems, part of the administration's proposal is the replacement of state regulation of insurance with a single federal regulator, which would likely preempt stronger consumer insurance protections at the state level.  "It's no surprise that the Bush administration comes out with an exclusively pro-business proposition," said Michael McRaith, insurance director for the Illinois Department of Financial and Professional Regulation. Under the Bush plan, "[v]ery large, wealthy companies would get to choose the lesser level of regulations."

Insurance regulation has traditionally been done at the state level and this has served consumers well.  States have 12,500 regulatory personnel around the country protecting consumers from financial losses and insurer insolvancy.  Given the track record of federal regulators, it's unlikely a single federal regulator would match the vigilance of state regulators. 

More of the Same on Deregulating Health Insurance Companies:  This proposal seems to be part of the longer-term goal of the Bush Administration to gut state health insurance regulations, a goal they previously supported under what they called "Association Health Plans" that would preempt state health care laws.

Fortunately, most Congressional leaders seem skeptical of the proposal.  Senate Banking Committee Chairman Chris Dodd called the administration's proposal a "wild pitch.  It's not even close to the strike zone."  But we can expect new attempts by industry that use federal preemption to undermine health care and other insurance standards to keep being revived under different names.

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Colorado Lawmakers Tightening Standards for Insurance Companies

Examples of the kind of tough state insurance regulations that would be undermined by wrong-headed federal preemption include the recent reforms Colorado and other states are pursing in their health insurance markets. 

In 2007, Colorado enacted tougher standards on how health insurance companies set monthly premiums by outlawing the consideration of health status as a factor in premium rate-setting decisions.  Building on this success, House and Senate leaders announced this week new efforts to rein in health insurance companies and ensure Coloradans are getting real value for their health insurance premiums. 

  • Prior Approval and Transparency - Pointing out that premiums in Colorado increased by an average of 60% from 2001 to 2005 while wages rose on average only 13%, Rep. Morgan Carroll introduced a plan to require insurance companies to justify premium hikes.  Regulators will be authorized to reject unjustifiable rate increases based on several factors, including incidence of claims and surplus revenues.  The bill will also bring transparency to the rate process.  The proposal's Senate sponsor is Sen. Paula Sandoval.

  • Timely Payment of Claims - Speaker Andrew Romanoff and State Sen. Ken Gordon announced a plan to prevent unreasonable denial of claims by insurance companies.  The measure would impose penalties if a claim is improperly denied.

  • Holding Insurers Accountable for Unfair Business Practices - HB 1228, sponsored by Sen. Gordon and Rep. Gwyn Green, will enable regulators to impose tougher penalties on insurers who deal with customers dishonestly.  It authorizes the insurance commissioner to collect restitution for wrongful acts and holds insurers accountable for the unfair business practices of both insurance companies and insurance agents.  HB 1228 has passed both chambers in slightly different form; amendments are being reconciled.

As we've written previously, Colorado's renewed push on insurance company practices is part of an important trend in several states to clamp down on excessive premium hikes and ensure consumers are treated fairly.

  • Washington State enacted SB 5261, which restores the insurance commissioner's oversight of the individual health insurance market by reinstating prior approval for rate increases and requiring health plans to maintain a 77% medical loss ratio.  As described by Families USA, a medical loss ratio is a requirement that insurance companies spend a certain percentage of premiums on direct medical care, limiting the percentage of premiums that go to inefficient administrative costs, like bonuses and excess paperwork.

  • The Pennsylvania House of Representatives just passed legislation (HB 2005) outlawing the consideration of health status, gender, or occupation as factors when setting premium rates in the small group market.  The legislation also requires insurers to meet a medical loss ratio of 85% and allows state regulators to reject premium hikes if insurers have not met robust standards, including new efficiency and quality benchmarks.

  • Connecticut is moving SB 491 to establish a task force to study medical loss ratios and the effect of establishing thresholds that insurers must meet.  The process laid out by the bill could shed important light on insurance company business practices and their efficient use of premiums paid.
  • West Virginia lawmakers are moving HB 4466 to create a permanent consumer advocate in the Insurance Department to act on behalf of consumers in rating decisions, legal proceedings, and other situations where a strong consumer voice is needed.
  • As reported by Health Access - California, California legislators are considering a panoply of bills to rein in insurers.  The strong push in the legislature comes after abusive business practices by many of the state's largest for-profit and not-for-profit insurers came to light over the past year, from providing bonuses to employees who cancel coverage after consumers submit costly claims, to recruiting physicians in canceling health insurance coverage.  State regulators continue to investigate these practices and levy fines.  Legislation in 2008 to watch includes: SB 1440 to set an 85% medical loss ratio; AB 1150, AB 1945 and AB 2549 to regulate how and how often insurers rescind, or cancel, health insurance polices, including outlawing compensation based on rescissions; and SB 1522, which would rank health insurance options according to quality and benefits covered, and limit total out-of-pocket costs in individual health plans.

Lest we forget that insurance companies are in the business of making money, the Pittsburgh Post-Gazette reports that health insurer Highmark enjoyed total revenue of $12.4 billion in 2007, growing its surplus to $3.5 billion despite a reduction in net profits.  The article goes on to report that several insurers are planning premium hikes over the summer because "per-share earnings" have not met projections, down from a forecasted $6.41 per share to between $5.76 and $6.01 in the case of the huge multi-state insurer Wellpoint.  Before you shed a tear for their financial woes, the Post-Gazette reports that Highmark's $3.5 billion surplus represents 734% of its risk-based capital - a measure of the money an insurer might need on hand in case of unforeseen claims.  The National Association of Insurance Commissioners, however, say that surpluses exceeding 250% of risk-based capital are troubling.  Troubling indeed.

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Addressing the Ever Growing Cost of College Textbooks

A freshman at Arizona State University recently spent $975 on one semester of textbooks.  In comparison, her father in 1977 paid $600 for tuition at the University of Illinois.  This anecdote aligns with a 2005 GAO Report that showed that college textbook prices have increased at twice the rate of inflation over the last two decades.  As the price of higher education textbooks increases so do the number of complaints being voiced to state legislators.  "Many students and their families are increasingly finding college financially out of reach, says former Oklahoma House Speaker Lance Cargill. "Tuition costs are just one component, we need to look at all of the hidden costs, such as fees, textbooks and supplies."

Research by State Public Interest Groups (PIRGs) demonstrates that the rising costs of textbooks is not inevitable and policy solutions exist to make textbooks part of an affordable college education. For example, according to PIRG research one cause of rising textbooks costs is that "the most widely purchased textbooks on college campuses have new editions published about every three years." On average, new editions cost 45% more than a used copy of the previous edition.  PIRG discovered, however, that faculty believe new editions are justified only half the time or less.  A second cause of increased textbook prices is bundling - the process of including additional instructional materials, such as CD-ROMs and workbooks, along with the textbooks.  PIRG says that bundling drives costs up by about 10% and most of the bundled books are not available a la carte or unbundled.

In an attempt to help alleviate the concerns of students and parents, 25 states (AL, AK, AZ, CA, CO, FL, IL, IN, IA, KS, KY, MD, MA, MS, MO, NJ, NY, OK, PA, RI, TN, UT, VA, WA, and WI), in 2008 alone, have introduced some form of textbook price containment legislation.  Below is a summary of certain bills provided by Campus Marketplace.

  • In Colorado, Senate Bill 73, addresses the issue of publishers updating non-outdated textbooks and bundling material.  The bill requires publishers to provide information on the wholesale prices of textbooks, substantial revisions between editions and the availability and pricing of alternative formats.  Publishers would also have to sell bundled textbook components separately.  SB 73 has been signed by the Speaker of the House and the President of the Senate.
  • Alaska House Bill 375, among other things, prohibits higher education institutions from adopting textbooks unless publishers have supplied summaries of the differences between textbook editions and the copyright dates of all previous editions.  Additionally, the bill bans institutions from accepting anything of value in return for choosing a certain textbook, other than complimentary copies, royalties, honoraria for peer review, and training in the use of materials.
  • Florida House Bill 603 and companion Senate Bill 2350 require public higher education institutions to post required textbook lists with ISBNs on the web at least 30 days before the start of each academic term.  This measure allows students to comparison shop between on-campus, off-campus, and online bookstores.  Additionally, students can consider the cost of textbooks when selecting courses.
  • In Kentucky HCR 4 requests a study of course material pricing.  The study will consider publisher pricing policies; production costs; market competition and profit margins for publishers, distributors, and booksellers; effects of digital materials on book prices; relationship between distribution structures for new and used books; role of shorter revision cycles; and adoption practices and the effect of marketing incentives.  
  • Rhode Island Senate Bill 2451 requires the Rhode Island Board of Governors for Higher Education to conduct a study on the cost of required textbooks for students attending public colleges and universities.  The bill specifies that the study should examine pricing trends and strategies, textbook rental programs, policies for textbook selection and buyback, joint purchasing of textbooks at volume discounts, and bundles.

 As university costs skyrocket, reining in escalating textbook prices is one way states are taking action to ease student expenses.

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Research Roundup

In their latest Economic Snapshot, the Economic Policy Institute highlights that teacher pay in the United States is not only falling behind other professions, but it also lags far behind other industrialized countries as a percent of per capita GDP.

Greater unionization of the workforce is one key to fighting economic inequality between the races, as a new study by the Center for Economic and Policy Research finds.  The report found that unionized black workers earned, on average, 12% more than their non-union peers and were more likely to have health insurance and pension benefits.

Highlighting the need to make sure green policies translate into good working conditions, Policy Matters of Ohio released a report, Good Bulbs, Bad Jobs: Workers and Conditions behind your new compact fluorescent, which found that that Xiamen Topstar Lighting Co. Ltd., a joint venture in which GE has a stake, violates numerous provisions of Chinese labor law as well as GE's own corporate policies.

The Institute on Money in State Politics raises concerns in a new study that "partnerships" between states and private insurance companies to offer long-term care insurance is being driven less by the goal of reducing Medicaid bills and more by industry lobbying backed by $205 million in state-level campaign contributions since 2000.

Examining the likely effects of enacting Election Day Regionistration on voter turnout in Massachusetts, an analysis by Demos finds that overall turnout would go up 4.9%, while turnout among those aged 18 to 25 would likely increase 9.7%.

The Elections Subcommittee of Congress' Committee on House Administration held a hearing on April 1st on the challenges that public assistance agencies face in fulfilling the requirements to register clients to vote under the 1993 National Voter Registration Act, including testimony by a range of state officials and advocates on how to improve procedures.

Please email us leads on good research at


Maine Senate Enacts National Popular Vote

Progressive States Network, National Popular Vote- A Voter Turnout and Civil Rights Issue

Progressive States Network - "National Popular Vote" Fix for Electoral College Passes MD Senate

National Popular Vote

FairVote - The Electoral College

National Popular Vote - Every Vote Equal: A State-Based Plan For Electing The President By National Popular Vote

FairVote - Presidential Elections Inequality: The Electoral College in the 21st Century

Gutting State Regulation of Insurance under Bush Administration's Financial Oversight "Reform"

Progressive States Network - The Predatory Lending Bubble and How the Feds Made it Worse

Progressive States Network - Bush's Fake Federalism: Health Care

National Association of Insurance Commissioners - State Insurance Regulation: Frequently Asked Questions

Families USA - Stop the Erosion of State-Enacted Consumer Protections

Colorado Lawmakers Tightening Standards for Insurance Companies

Progressive States Network - Insurance Reforms to Ensure Fairness and Access to Coverage

Georgetown University Health Policy Institute - Key Consumer Protections in Individual Health Insurance Markets

Families USA - Good Ideas: Approaches to Improve Private Markets and Provide Health Insurance for More Uninsured Americans

Community Catalyst - Insurance Reform



The Roosevelt Institution "Toward a New New Deal"

April 9th
Washington, D.C., Willard Hotel

The conference will use the occasion of the 75th anniversary of the New Deal to discuss the politics and policies of FDR's presidency and explore the terms of a new social contract for the next century.  At the conference, Progressive States Network's Executive Director Joel Barkin will be moderating a panel entitled "Progressive Movements and Policies at the State Level."  For more information””including agenda and registration details””click here.


Young Elected Officials National Convening

April 23th
Little Rock, Arkansas - William J. Clinton Presidential Library

The largest gathering of young progressive elected leaders in the country will meet.  On April 23rd, PSN's Policy Director, Nathan Newman, will be participating in two training sessions, one on building progressive tax structures at the state and local level and a second on immigration reform.


The Stateside Dispatch is written and edited by:

Nathan Newman, Policy Director
J. Mijin Cha, Policy Specialist
Julie Schwartz, Policy Specialist
Christian Smith-Socaris, Policy Specialist
Adam Thompson, Policy Specialist
John Bacino, Operations Manager
Marisol Thomer, Outreach Coordinator

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