Consumer Watchdog Campaign: Prop 45 Could Save Californians As Much As $1 Billion Annually On Health Insurance

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Santa Monica, CA – Proposition 45 is projected to bring up to $1 billion per year – $612 per family – in savings to California consumers reeling from years of devastating health care premium increases, according to a new analysis released by Consumer Watchdog today.

Click here to read the Prop 45 savings analysis.

“Californians are being overcharged hundreds of millions of dollars for their health insurance because no one in California can say no to health insurance companies’ excessive rate hikes. California’s experience with auto insurance regulation, and successful health insurance rate regulation in other states, show that requiring health insurance companies to justify and get approval for rate hikes under Proposition 45 could save up to $1 billion per year, or $612 per California household,” said Carmen Balber, executive director of Consumer Watchdog.

Proposition 45 requires health insurance companies to get permission before raising rates for approximately 6 million individual and small business insurance policyholders.  More than 35 other states have the power to reject unreasonable health insurance rates, but no federal or state agency has the power to reject unreasonable rate hikes in California.  

Linda Raffel, lifelong resident of Los Angeles and an Anthem Blue Cross individual policyholder, stated, "I'm getting $196 worth of health insurance with an $854 price tag. I’ve been waiting for Proposition 45’s type of protections for a long time."

Six health insurance companies are the sole funders of the No on Proposition 45 committee – Kaiser, Anthem Blue Cross, Blue Shield, Health Net, United Healthcare and Aetna – and have donated $37.3 million against Prop 45.

Auto, home and business insurance companies must already publicly justify and get approval for rate increases under Proposition 103, the 1988 ballot initiative that has saved drivers in California over $100 billion, according to a 2012 report by the Consumer Federation of America. Proposition 45 applies those rules to health insurance.

Prop 45 also gives the insurance commissioner the right to prevent health insurance companies from passing on to consumers the costs of lobbying, campaign contributions, civil fines, bad faith judgments, or excessive executive compensation, as is the rule for other insurance companies in the state.

Health insurance rates in California have gone up 185% since 2002, more than five times the rate of inflation, according to the California HealthCare Foundation. More recently, nearly 1 million California policyholders faced $250 million in rate hikes that were deemed “unreasonable” by regulators, but regulators had no power to stop the increases.

The savings analysis, prepared by Consumer Watchdog in consultation with a nationally- recognized health insurance actuary, applied three different models to enrollment and premium projections to arrive at conservative estimates of annual consumer savings from Prop 45 ranging from around $235 million to $1.2 billion.

The analysis considered existing models of insurance rate regulation:
•    The Proposition 103 savings model applied the 1.7% per year savings auto and other casualty insurance customers have saved to these premium and enrollment estimates to arrive at a total annual savings of $1.2 billion.
•    Oregonians experienced savings of 0.97% in 2012 and 4.58% in 2014. Using the 0.97% figure provides a savings of $251 million per year for Californians.
•    The third savings model used savings from unreasonable property and casualty rate proposals that were rejected by the California Insurance Commissioner

Proposition 45 will:
•    Require health insurance companies to publicly disclose and justify, under penalty of perjury, proposed rate changes before they take effect.
•    Allow public hearings on proposed rate increases.
•    Give Californians the right to challenge excessive and unfair premium rate increases.
•    Give the insurance commissioner authority to reject unjustified rate increases.

For more on Proposition 45 visit:

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Paid for by Consumer Watchdog Campaign – Yes on 45, a coalition of consumer advocates, attorneys, policyholders, and nurses. 777 S. Figueroa St., Ste. 4050, Los Angeles, CA  90017.  Major Funding by Consumer Watchdog Campaign and Thomas Steyer.

Carmen Balber
Carmen Balber
Consumer Watchdog executive director Carmen Balber has been with the organization for nearly two decades. She spent four years directing the group’s Washington, D.C. office where she advocated for key health insurance market reforms that were ultimately enacted into law as part of the Affordable Care Act.

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