California Needs Reasonable Controls On Health Care Premiums

Published on

California should join the majority of states across the nation, 36 of 50, that have authority to control health insurance rate hikes.

A consumer group is expecting to begin collecting signatures within the next few days to put a regulatory measure on the November ballot. They should work to give California voters the opportunity to voice their opinion on how much regulation is needed over an industry raking in record profits.

The best place to resolve such important statewide issues is in the Legislature. But lawmakers have taken several runs at giving California's insurance commissioner the power to limit rate hikes and failed each time, thanks to a handful of stubborn Republicans who worked to kill the bills.

In 2010, a year in which medical costs increased by about 9 percent, the five largest health insurers in the United States saw their profits soar by 16 percent while raking in nearly $12 billion. All told, since 2002, employer health insurance premiums have climbed 152 percent.

And who can forget that in 2010 Anthem had proposed a whopping 40 percent increase that President Barack Obama used as Exhibit A in the need for comprehensive national health care reforms. In 2011, Anthem Blue Cross raised rates by an average of 16 percent despite the protests of regulators and California Insurance Commissioner Dave Jones. Insurance companies are fond of arguing that California is a "success story" when it comes to providing affordable insurance in the state, but one out of every five Californians with annual family incomes between $50,000 to $75,000 is uninsured. One million California children still have no health care coverage, and 60 percent of Latinos in California are uninsured.

The best model for the consumer group working on the potential initiative is Proposition 103. The 1988 ballot measure gave the state insurance commissioner the power to control car insurance rates. Insurers conducted a massive ad campaign against the proposition, arguing that rate regulation would increase administrative and legal costs and would drive insurance companies out of California. They lost.

And instead, the opposite occurred. Drivers experienced an increased number of insurance options in ensuing years, and Californians stopped seeing the outrageous types of price increases they had witnessed for the previous decade.

If the new initiative qualifies for the ballot, voters should expect to see a huge advertising campaign from the health insurance industry, arguing that it will result in higher insurance costs and do nothing to solve the problem of skyrocketing medical costs. Jamie Court, president of Consumer Watchdog, told the Mercury News that she predicted the industry may spend as much as $100 million opposing the measure.

Private insurance companies deserve the right to make a reasonable profit. The intent of a ballot measure would be merely to guarantee that insurance companies justify their rate hikes so Californians pay a fair price for their coverage. Almost three-quarters of states have seen the wisdom of implementing rate controls. California should make sure insurance companies aren't left to their own devices.

Latest Videos

Latest Releases

In The News

Latest Report

Support Consumer Watchdog

Subscribe to our newsletter

To be updated with all the latest news, press releases and special reports.

More Releases