The recently passed Patient Protection and Affordable Care Act takes great strides to restore competition in health insurance markets and to protect consumers from faulty and ineffective products. The law will establish health insurance exchanges where consumers will be able to directly compare costs and understand what they’re paying for and provide standards to insurance companies to present information about their policies in a clear and consistent fashion. It will also require insurers to publicly justify rate increases in advance, which will prevent unreasonable rate hikes and give consumers warning before their rates go up.
But anticompetitive, deceptive, and egregious practices by health insurers have the potential to undermine Congress’ efforts to create choice and transparency in health insurance markets. It is critical that the Obama administration take action to reverse years of regulatory neglect in the health care industry. One step the administration can take is to create a vigorous health insurance consumer protection program at the Federal Trade Commission. The FTC has long used its authority to protect consumers in areas such as financial services and can do the same for those who hold health insurance. A new division could prevent egregious and fraudulent practices, make more information available to consumers, and inform marketplace participants of how to play by the rules through studies, hearings, and industry conferences.
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