Regulating Health Insurance Rates

Health Insurance Rates

California’s Health Insurance Crisis, and How to Fix It

As of January 1, 2014, the federal health law requires all Americans to have health insurance or pay a fine. But rising premiums are making insurance unaffordable. The California HealthCare Foundation found that health insurance premiums for Californians have gone up 185% since 2002. 

The escalating cost of health insurance in California is a crisis. A majority of states already have, or are putting into law, the right for regulators to modify or reject rates before they go into effect. Not California.

The reason for California’s poorly regulated market and lack of alternative choices is the power of the insurance and medical lobbies in the state, along with a Legislature that has failed to stand up to them.

Legislation to properly regulate California health insurance rates, in the same way that auto and homeowner insurance rates are successfully regulated, has been blocked by the insurance lobby in every legislative session for a decade. That's why Consumer Watchdog wrote and sponsored Proposition 45 (, an initiative on the November 2014 ballot that would have required insurance companies to open their books and justify rate increases before they take effect. Prop 45 would have extended California’s successful auto, home and business regulation – that has saved drivers $102 billion since 1988 (, to health insurance. Up against over $50 million in insurance industry spending, the consumer-backed initiative lost. If you have a story about your health insurance rate hikes or other insurer abuses please click here to tell us about it.


Health insurance companies are imposing excessive rate hikes on consumers, even when state insurance regulators determine that the rates are unreasonable.

Californians Spent $250 Million On Excessive Health Premiums

A Consumer Watchdog analysis, in conjunction with a nationally-recognized health insurance actuary, finds that health insurance rate regulation could save Californians $1 billion annually on their monthly health insurance premiums. Read the analysis.

How health insurance companies stand to gain from the defeat of rate regulation in California

Why Obamacare insurance marketplaces don’t want to make waves: They rely on health insurance companies as partners

2011 study by Consumer Watchdog found that without strong state powers to approve or deny health insurance rates, federal health reform cannot succeed. As the subtitle of the study put it, “Can’t Have One Without the Other.”

Watch here as Sen. Dianne Feinstein introduces Consumer Watchdog’s study in Washington. She calls for rate regulation as a first step, but goes much further—she excoriates private insurance companies for creating a costly, unfair system that denies healthcare to millions of people nationally and in California.

A 2011 study by the Kaiser Family Foundation shows that both employers and employees are being hammered by health insurance rate increases far in excess of medical inflation, even as workers’ pay has been flat or declining for a decade.

The result of these rate increases, in concert with the recession, is that fewer than half of Californians now have health insurance through an employer. Those who do have it are paying an ever-higher share or premiums, and more for copays and deductibles.

HHS sees “prior approval” rate regulation as providing “maximum protection for consumers.”

Kaiser Foundation report finds that “states with prior approval authority over rates appear to be better positioned to negotiate reductions in rate requests filed by carriers.” 

Disclosure by insurance companies is not enough to hold down rates

Success of auto and homeowner insurance regulation is a predictor of what health insurance rate regulation would do in California.

Chart and news release track Blue Cross/Wellpoint transfer of billions of dollars from California patients to out-of-state parent, Anthem.

Chart and news release on Blue Shield $2.9 billion surplus, 12 times the statutory minimum reserve.

Patient Stories

What happens to real people when private health insurance becomes unaffordable? Here are stories of the strain, worry and loss of insurance caused by escalating premiums and other medical costs