One year after a new law (SB 1163) expanded state officials' ability to review health plan rates, some consumer advocates are calling for greater power to regulate insurance rates, the Contra Costa Times reports.
In California, the state Department of Managed Health Care oversees HMOs, while the California Department of Insurance oversees most PPOs.
The agencies can review insurers' plans for rate hikes and either request that the insurer abandon the hikes or publicly say that the hike would be unreasonable. The agencies do not have the authority to block the proposed increases.
SB 1163 took effect on Jan. 1, 2011, and it requires insurers to document their need for premium increases. CDI previously could review rate filings by plans on the individual market, but SB 1163 expanded oversight to include other plans.
Consumer Advocates Speak Out
Consumer advocates are pushing to have California join 36 others states that allow some type of health insurance rate control.
State Insurance Commissioner Dave Jones (D) and some consumer advocates support legislation — AB 52, by Assembly member Mike Feuer (D-Los Angeles) — that would let state regulators reject proposed health insurance rate increases that are deemed excessive.
Meanwhile, Consumer Watchdog is aiming to place a measure on the November ballot that would give the state authority to reject health insurance rate increases.
Health Plans' Response
Health insurers oppose most forms of premium regulation and have argued that it could cost the state $30 million annually to enforce.
Patrick Johnston — president and CEO of the California Association of Health Plans — said that additional regulations would not address the real causes of the rate hikes. Johnston said those causes include rising medical costs, lower reimbursement for Medi-Cal and seismic building requirements. Medi-Cal is California's Medicaid program (Kleffman, Contra Costa Times, 1/15).