There is a bill in California that has yet to be voted on. If passed, it would give state officials the legal right to reject rate increases that are proposed by health insurance companies. The bill will be voted on this week, and is facing intense pressure from lobbyists. If it passes, this could influence other states to enact similar laws.
The bill is called AB52, and it will be voted on soon. If this bill gets signed into law, then it would give the California state insurance commissioner or the Department of Managed Health Care the legal right to reject rate increases that are proposed by health insurance companies. In short, it would give the regulators the power to stop insurance companies from imposing excessive rates on their customers. It would be a form of protection for consumers.
Supporters of the bill point out a vivid example of why this bill needs to become law. Last April, Anthem Blue Cross went ahead and raised the rates for 120,000 customers by around 16% even after insurance regulators said the rate was “excessive”.
The Senate Health committee heard hours of testimony from people who talked about how the increased rates have affected them. Several stories were heard describing how an inability to afford health insurance coverage resulted in a person filing for bankruptcy, or how people were having to choose between paying their mortgage or paying their health insurance premium.
Critics of this bill include health and insurance industry representatives. They have concerns about putting the power of veto into the hands of the California insurance commissioner. The group notes that the position is an elected office, and that it is often filled by “ambitious Democratic politicians”.
Critics also say that if insurance companies are forbidden from increasing their rates it will impact more than the insurance companies themselves. It will cause the insurance company to cut the rates that it pays to doctors. They say that right now, doctors are subsidizing the health care they give to people who are poor from the payments they get from patients that are covered by private insurance.
The outcome of this bill, whether it becomes a law or not, can potentially influence other states to create the same types of bills. California has a huge insurance market, and the state’s political landscape often has national influence. It has been described as a “battleground state” for regulations regarding insurance.
Image by Mario Sánchez Prada on Flickr