California turns up the heat on insurers

Proposed law could expand state's authority to regulate rates

California is a brewing hotbed of potential trouble when it comes to insurance rates. California lawmakers propose a state-wide vote on a new ballot initiative that would expand the state's authority to regulate health insurance rates. To make matters worse, voters show signs they support the measure, according to an article in Kaiser Health News.

Nearly 7 of every 10 California voters indicated that they would vote in favor of Proposition 45, while 16 percent would vote against it, according to an independent poll released Aug. 20 by the Field Research Corp. in San Francisco, KHN writes.

Proposition 45 would give California's insurance commissioner the power to veto health insurance rate increases. The Department of Managed Health Care and the California Department of Insurance currently oversee the rates. Under the current method, insurance companies must submit proposed rate increases for review each year and state regulators may declare rates unreasonable but cannot block them from going into effect, according to KHN.

If the new ruling passes, insurers will face heavy scrutiny and monitoring. 

Insurance laws vary widely from state to state, but more than half of states already require the government to approve some health insurance rate increases before implementation, according to data from the National Association of Insurance Commissioners, the Kaiser article says.

Some states that require prior approval of rates have had to plan ahead to meet open enrollment timelines under the health law, Sabrina Corlette, a senior research fellow at the Georgetown University Health Policy Institute in the District of Columbia. told Kaiser Health. But in general, she says the extra reviews have not posed a problem.

"This is the missing piece of health reform," Carmen Balber, executive director of Consumer Watchdog in Santa Monica, whose group sponsored the initiative, told Kaiser.

"If every Californian is required to purchase health insurance and no one is overseeing what insurance companies can charge, the insurance industry will have a free pass to raise prices at will," Balber said.

But health insurers in 10 states that reported rate filings have the support of Moody's Investors Services to go forward with double-digit rate hikes in 2015, FierceHealthPayer previously reported. Moody's analysts said the rate increases reflect an increasing medical cost trend, the Affordable Care Act industry fee and regulatory changes that allow people to keep noncompliant plans for another year.

For more:
- here's the Kaiser article
- take a look at the field poll

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