Consumer Group Calls For Prior Approval Rate Regulation For Industry

CALPERS, the California state employee purchasing group, announced today average premium increases of 9.7 percent for the 10 HMOs that serve the group.

Because CALPERS receives discounted premiums, this signals a return to the days of double digit health insurance premium increases for the rest of us, only patients are receiving a lot fewer benefits under HMO medicine than their dollar used to buy.

“HMO patients are paying a lot more for a lot less care,” said Jamie Court, advocacy advocacy director for the Foundation for Taxpayer and Consumer Rights, a watchdog group. “HMOs have shown they can neither manage our health care nor manage our health care bills. Legislators must not only reform how HMOs deliver care, but there also must be regulation of how big a bill HMOs can submit to the pubic. Such regulation already exists in California under Proposition 103 for property casualty insurers.”

The Foundation called upon the California legislature to require prior approval from regulators before HMOs and insurers can raise their premiums more than 7%. In California, property/casualty insurers cannot raise rates without justifying them and submitting to public hearings. State approval is required for property/casualty insurers before rates are raised or lowered, as opposed to the “file and use” system, now in place for HMOs, where HMOs simply file the rate and used it.

“Health care businesses should be required to show the need for rate increases and where and how the money would be used,” said Court. “These rate increases are propping up a renewal of HMO profits, not better care. If care is to be rationed, so should HMO profits.”

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