Insurance Industry

Extending a lifeline to what had long been some of the nation's most prudently managed firms, the Treasury Department has decided to make ordinary life insurance companies eligible for federal bailouts. The expansion marks another sign that the economic crisis plaguing the nation and the world has spread to the seemingly safest corners of the financial system.

The U.S. Treasury Department granted preliminary approval Thursday for some of the nation's largest insurance companies to receive capital infusions under the government's Troubled Asset Relief Program, Treasury spokesman Andrew Williams said. Recipients are Hartford Financial Services Group Inc., Prudential Financial Inc., Allstate Corp., Ameriprise Financial Inc., Lincoln National Corp. and Principal Financial Group Inc., he said.

The nation's two largest health insurers have been pressuring employees to lobby against healthcare reform in Congress in violation of a California law against coerced political activity, a consumer group alleged Wednesday. Consumer Watchdog in Santa Monica has asked California Atty. Gen. Jerry Brown to investigate its claim that UnitedHealth Group and WellPoint Inc. pushed workers to write their elected officials, attend town hall meetings and enlist family and friends to ensure an overhaul that matches their interests.

Under the healthcare proposals now before Congress, insurance companies would no longer be able to charge higher prices to policyholders who had diabetes or cancer, became pregnant or were severely overweight. But the far-reaching clampdown on insurers leaves one highly controversial element untouched: the issue of charging higher premiums to older policyholders than to younger, presumably healthier consumers who are less likely to file costly claims. Under the provisions of the bill passed by the House on Saturday, as well as in the probable Senate version, insurers will be able to charge middle-aged consumers at least twice as much as they do younger customers.

A tactic used by insurance companies to deny expensive behavioral therapy to autistic children has been deemed illegal by a Los Angeles judge. In a preliminary ruling, Los Angeles County Superior Court Judge James C. Chalfant found that Kaiser Permanente's refusal to pay for a child's autism treatment because the provider was not licensed by the state runs counter to California's Mental Health Parity Act. That act requires insurers to cover care...

The White House will not commit to healthcare legislation that would cap insurance premiums or tax benefits, taking a wait-and-see approach as congressional negotiators seek a deal, advisors said Sunday. President Obama will not demand that a final bill include a government-run plan as a way of driving down costs through competition, though that's his preference, they said. "There will be compromise. There will be legislation, and it will achieve our goals: helping people who have insurance get more security, more accountability for the insurance industry, helping people who don't have insurance get insurance they can afford, and lowering the overall cost of the system," senior advisor David Axelrod said on ABC's "This Week."

As President Obama's push for a healthcare overhaul moves toward its final act, the oft-vilified health insurance industry is on the verge of seeing a plan enacted that largely protects its financial interests. That achievement, should it stand up in the final legislation, would be the capstone of a sophisticated lobbying and strategic campaign that began even before Obama was elected president. The specifics of the healthcare legislation are still being hashed out on Capitol Hill, and key details will evolve in the days ahead.

Healthcare overhaul legislation moving through the Senate Finance Committee would put crucial rule-making authority in the hands of a private association of state insurance commissioners that consumer advocates fear is too closely tied to the industry. The National Assn. of Insurance Commissioners currently writes model laws and regulations that individual states are free to accept or discard. Under the bill by Sen. Max Baucus (D-Mont.), it would craft a model rule governing "health insurance rating, issuance and marketing requirements" that would become "the new federal minimum standard without any further congressional action."

California's top insurance regulator is expected today to file a lawsuit to try to stop the governor from selling $1 billion worth of business at a state-run workers' compensation insurance company. Last month, Gov. Arnold Schwarzenegger and the Legislature approved the proposed sale to raise money to partially plug a $24-billion hole in the state budget. But Insurance Commissioner Steve Poizner vowed to fight it. "This is bad politics; it's illegal, and I'm going to stop it," said the wealthy former tech entrepreneur from Silicon Valley, who is seeking the Republican nomination for governor in 2010.

Despite growing frustration with the way health insurers deny medical treatments, major healthcare bills pending in Congress would give patients little new power to challenge those sometimes life-and-death decisions. "Right now, the deck is stacked against patients," said Bryan Liang, director of the Institute of Health Law Studies at California Western Law School in San Diego. "Healthcare reform is not going to change the ball game." Yet a patient's ability to fight insurers' coverage decisions could be more important than ever because Congress, in promoting cost containment and price competition, may actually add to the pressure on insurers to deny requests for treatment.