The California insurance commissioners should be able to regulate health insurers’ rate increases, including the up to 24% hike insurers plan for small businesses in July and August, according to a consumer advocacy group.
Consumer Watchdog says a ballot initiative, which would give the insurance commissioner power to regulate insurers’ rate increases, is necessary. The initiative, if it reaches the ballot in November and is approved by voters in the state, would force health insurance companies to publicly justify rate increases and get approval before they take effect.
In April, the California Insurance Department called Aetna’s 24% rate hike for small business policyholders was “excessive,” a word President Obama and his administration have used when referring to rate hikes that exceed 10%. Interpreting the Patient Protection and Affordable Care Act, the administration also seeks to evaluate all rate request proposals greater that 10%, even in states where laws don’t allow it.
“Health insurance companies will continue increasing rates at a pace that far outstrips the cost of medical care until California finally has the power to say no when increases are excessive and can’t be justified,” said Carmen Balber of Consumer Watchdog Campaign, sponsors of the proposed ballot measure. “This ballot initiative gives voters the power to make health insurers publicly justify their repeated price hikes and make health insurance more affordable for struggling small business owners and individuals across California.”
The ballot initiative is awaiting verification of the 800,000 signatures submitted last month to qualify the insurance rate reform measure for the November ballot.
Insurance Commissioner Dave Jones is lobbying for passage of the initiative.
The California Medical Association, representing 35,000 doctors in the state, opposes the measure.
“Arbitrarily imposing rate regulation could have the unintended consequence of seriously undermining the ability of health care providers to serve their patients,” California Medical Association CEO Dustin Corcoran said of rate reviews in a statement. “If regulators set rates at a level that doesn’t meet the cost of providing care, insurers will be forced to lower reimbursements to physicians, hospitals and other providers. Lower reimbursements over time result in reduced access to specialists, substandard facilities and lower quality of care.”
The six largest health insurance companies in California – Anthem Blue Cross, Kaiser, Blue Shield, Aetna, UnitedHealthcare and Health Net – are proposing raising rates for small business policyholders this summer. The cost of health insurance has increased 153% since 2002 – five times the rate of inflation, according to the California HealthCare Foundation.
Existing insurance law in California, called Proposition 103, requires home, auto and other property and liability insurance companies to publicly justify and get rate increases approved. The proposed ballot initiative would make health insurers comply with the law that already applies to most other insurance companies in California.
