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Jones/Feuer Effort Defeated; Schwarzenegger/Leno Bill Clears Legislature Allowing Insurers to Charge "Unreasonable" and "Unjustified" Premiums
 
Santa Monica, CA – Sacramento lawmakers, buffeted by hundreds of thousands of dollars in insurance company contributions, defeated a strong insurance rate reform bill supported by consumer and labor organization (AB 2578- Jones/Feuer) late Tuesday night. Democratic opponents of the Jones/Feuer legislation supported an alternative bill, proposed by Governor Schwarzenegger and carried by Senator Mark Leno (SB 1163), that allows insurers to charge excessive health insurance premiums under a new, industry-preferred standard that merely requires rates to be "actuarially sound."  

The chief funders of California's anti-regulation Proposition 23 on the November ballot are a pair of Texas-based refiners, Valero and Tesoro. Each of them has two refineries in California and the last thing they want, from a profit standpoint, is regulation of greenhouse gases or any concerted attempt to slow climate change.

Santa Monica, CA -- Some of the top Democratic recipients of health insurance cash teamed up with Republicans in the California state senate late Monday to block health insurance premium legislation authored by state Assembly Members Dave Jones and Mike Feuer. Overall health insurers have given $800,218 in campaign contributions to California senators since 2007, in addition to gifts and donations made at their behest to nonprofit groups according to an analysis by Consumer Watchdog.

When Anthem Blue Cross announced its controversial premium increases in California recently, the insurer claimed, "a carrier must be able to receive actuarially sound rates." So it is remarkable that "progressive" San Francisco State Senator Mark Leno, a single payer health care advocate, recently introduced eleventh hour legislation codifying Anthem Blue Cross's "actuarially sound" defense of premium increases in law.

Actuarial Soundness” Defense Protects Insurers At Expense of Rate Regulation, Consumer Watchdog Says

Los Angeles, CA -- Anthem Blue Cross’s defense of its recent controversial premium increases will be codified in law under eleventh hour legislation by San Francisco State Senator Mark Leno, SB 1163, just as the California legislature is set to adjourn Tuesday night. Consumer Watchdog, the group behind auto insurance regulation Prop 103 that has saved Californians $62 billion, warned that if health insurers can defend rates simply by having an actuary say the increases are “actuarial sound,” as Anthem Blue Cross did and Leno’s legislation provides, consumers will be in big trouble.

At the shoe store, 40% off qualifies as at least pretty good. So why does regulators' approval of new, lower rates by Blue Cross of California not feel like victory? There are lots of reasons, but first is that the revised Blue Cross rate hikes are still in double digits, averaging 14% and as high as 20%, while average wages are still falling. And Blue Cross could announce another rate hike whenever it pleases, just as many insurers continue to do.

The $1-million grants, which went to all but five states, will help many expand public access to information about rate hikes and hire experts to review proposed charges.

In California, Gov. Arnold Schwarzenegger's administration specifically ruled out seeking prior approval authority. Consumer Watchdog, a Santa Monica-based advocacy group, urged the administration to reject California's grant application, saying the grant would "prevent, not develop, any effective state regulation of health insurance rates." California nonetheless received its grant, which is to be used to streamline collection of data on proposed rate hikes.

Program Provides Economic Opportunity in Tough Times, With No Taxpayer Cost
 
Santa Monica, CA – California lawmakers gave final approval Wednesday to legislation strengthening and extending the innovative “Low Cost Auto Insurance Program” that offers an affordable bare bones car insurance policy to low-income motorists with no taxpayer cost. Consumer advocates applauded lawmakers for passing AB 1597 (Jones) on a bipartisan basis and are urging Governor Schwarzenegger to sign the bill in order to keep this program available.

WASHINGTON, DC -- As Americans struggle with double-digit hikes in their health insurance bills, millions are coming up against a hard reality: The state regulators who are supposed to protect them can often do little to control what insurers are charging. Consumer advocates and administration officials are trying to spark new state efforts because the new healthcare law gives the federal government only limited power to regulate premiums, traditionally a state responsibility. The Obama administration plans to announce a series of $1-million grants next week to help states increase their oversight.

There are days when the idea of private health insurance companies running health reform are more ludicrous than others. Today, we find that health insurance CEOs are raking in ever-higher compensation--up to $110 million a year for one retiring CEO. This is obviously where a lot of our ever-rising premium dollars are going.

Within a few years, 6 million uninsured California residents will finally get medical coverage as part of the newly passed federal health care reforms. But what will they pay? And who will regulate premiums as insurers angle for customers? Right now, Sacramento has little control over health care rates, largely because industry lobbyists have killed efforts to change a rules-free marketplace. According to the organization Consumer Watchdog, health insurance interests have given $800,218 over the last three years to members of the state Senate, where showdown votes on insurance controls are due this month.

California's new rules let applicants say they're not sure or they can't remember the answer to a health history question. Federal health reform allows insurers to cancel a policy only if there was intent to deceive. Jamie Court directs the nonprofit group Consumer Watchdog. "Having the double whammy of both the new federal rules and the state insurance commissioner's regulations, makes it very clear to insurance companies what they can and cannot do," said Court.

The California-based nonprofit Consumer Watchdog made that point in a letter sent Tuesday to HHS Secretary Kathleen Sebelius urging her to reject Gov. Arnold Schwarzenegger’s (R) application for a rate review grant. The letter criticizes the governor’s application because California would use the money to hire actuaries to review rate filings without giving them the authority to reject rate requests. “I think the intent of the grants was specifically to enhance states’ ability to thoroughly evaluate and, where it can, to approve or disapprove rates,” said Carmen Balber, the group’s Washington director.

 

As an Aug. 31 deadline nears, state lawmakers haggle over how difficult it should be for companies to significantly raise premiums.

Consumer groups, meanwhile, say that allowing insurance companies to pick the actuaries who review their filings would give them too much influence over the process. "Insurance companies in California will be getting millions of new customers, and the least that Californians should get in return is strong oversight of rates and premiums," said Judy Dugan, research director for Consumer Watchdog in Santa Monica. "Instead, the governor's proposal would prevent effective oversight."

If Californians Have to Buy Health Insurance, Insurers Have to Be Regulated, Says Watchdog’s Letter to Gov.

Santa Monica, CA -- Consumer Watchdog has called on Gov. Arnold Schwarzenegger to withdraw weak pseudo-reforms of the health insurance industry that would bar strong regulation of health insurers. Schwarzenegger sent his proposals this month to lawmakers who are seeking stronger state regulation modeled on the successful market reforms of auto and homeowner insurance under Proposition 103, demanding that they substitute his legislation for their bills.

Santa Monica, CA -- Consumer Watchdog today praised a group of 37 state attorneys general for seeking to get to the bottom of the Google Wi-Spy scandal and reiterated its call for the House Energy and Commerce Committee to hold hearings on the issue.

SUNDAY PROFILE: Rose Ann DeMoro

Harvey Rosenfield, founder of Consumer Watchdog in Santa Monica, warned that DeMoro "has no fear. She is a warrior. ... You combine those qualities - knowing how to fight, being unafraid and uncompromising - and you have a unique individual in American politics." Someone who learned that lesson, Rosenfield said, was Gov. Arnold Schwarzenegger, who became a target of nurses' protests in 2005 when he attempted to roll back nurse-patient ratios in the state.

Without directly revealing their involvement, major industries and organizations play key roles in legislative contests.

Voters may not have been aware that insurance companies, lawyers and other interests were calling most of the shots in the three campaigns. The California Senior Advocates League, which paid for attack ads in two of the three contests, received money from JobsPAC, which is affiliated with the Chamber of Commerce, and Put California Back to Work, a committee sponsored by the Civil Justice Assn. of California. Both groups' members and contributors are mostly big corporations. Doug Heller, executive director of the Santa Monica nonprofit Consumer Watchdog, said the league's name gives the impression that the candidates' support is coming from "an authentic campaign by seniors."

People have been rejected for such common conditions as acne and high blood pressure, said Judy Dugan, research director for Consumer Watchdog. "If you are pregnant, (insurers) will run the other way screaming," she added. "They don't want to insure a baby until they have looked it over to make sure it's absolutely healthy."

Anthem Blue Cross has become a poster child for stricter premium regulation, said Jamie Court, president of Consumer Watchdog, a group based in Santa Monica, CA.  Court said the double-digit increase following its earlier hike so closely shows the need for a law that gives regulators "the power to say no" to rate increases from insurers making "too much" money.