California advocacy group Consumer Watchdog is taking a new approach in the push for tighter regulation of the state's health insurance rates.

After a bill giving state regulators the power to reduce or even veto companies' health premium hikes stalled in the Legislature a couple of months ago, the organization decided to bypass the political establishment altogether. Instead, it is taking its cause directly to voters by submitting an initiative to the state attorney general. If it garners enough citizen support, Consumer Watchdog's proposal to drastically limit health insurers' rate-making abilities would be added to the November 2012 ballot.

History suggests that the organization faces a steep climb just to get to that point, however. Legislation giving California regulators more power over rate changes have failed multiple times. In September, a measure sponsored by Assemblyman Mike Feuer, D-Los Angeles, and backed by current insurance Commissioner Dave Jones, failed to win enough support in the state Senate. Jones had authored a similar bill two years earlier that also failed.

Standing in the way of reform is a stiff health care lobby. The California Association of Health Plans vehemently opposes increased state control over rate increases, and in its fight against Feuer's legislation, it enlisted a number of influential allies.

"A growing diversity of interests, including doctors, business, taxpayer and farming groups, are expressing concern that the bill is misguided and will increase employers' costs, limit coverage choices and hinder patients' access to medical care," CAHP said in a June 1 statement about Feuer's rate regulatory efforts.

The organization added that more than 50 groups opposed the measure, including the California Medical Association, California Chamber of Commerce and California Association of Physician Groups.

CalPERS's board also came out against the bill, saying it would intrude on its ability to set HMO plan rates.

Consumer Watchdog's initiative seeks to go even further than the previous attempts, proposing that, in addition to allowing the insurance commissioner to reject health insurance price hikes, companies' rate applications be sworn as truthful under California law. Inaccuracies or false statements justifying an insurer's need for higher rates could then lead to prosecution.

"We're creating the opportunity for the public to have a right to know why rates are high, and have the companies certify under penalty of perjury why they're justified," Consumer Watchdog President Jamie Court told SNL.

A number of major insurers in California have proposed double-digit premium increases over the past couple of years, with Aetna Inc. filing for an average 17.9% hike and WellPoint Inc.'s Anthem Blue Cross Life & Health Insurance Co. seeking an average 16.4% increase. Blue Shield of California in January filed to raise rates by as much as 59%. Aetna and Anthem Blue Cross later agreed to scale back the increases following objections from the state's insurance department, and Blue Shield withdrew its proposal after Jones and U.S. Health and Human Services Secretary Kathleen Sebelius criticized the plan.

Under Consumer Watchdog's initiative, Jones would have been able to reduce or reject those rate increases outright, as well as force the companies to give a detailed explanation for why they needed such hikes.

CAHP wasted no time in voicing its displeasure with Consumer Watchdog's plan, blasting it as a "deeply flawed" policy that "does not address the real reason health care costs are increasing."

In addition to overcoming its deep-pocketed opponents, Consumer Watchdog must also collect nearly 505,000 signatures in support of the initiative just to get it onto the ballot. It will have less than five months in between the initiative's approval in early January and the May 1 ballot deadline to do so. Should it make it that far, the organization then must publicize the issue well enough to get California residents to vote in favor of the reforms.

Despite those challenges, though, Court is enthusiastic about the organization's chances for reforming rate-making. A successful 1988 initiative, Proposition 103, gave the insurance commissioner similar prior approval powers for property and casualty insurance rate changes, and he said citizen polling on the current initiative shows that a "supermajority" support it.

As for the insurers and business organizations working against him, Court predicted the publicity would benefit his campaign.

"They usually make their own mistakes and we exploit them, so we're counting on them spending a lot of money and being greedy and stupid," he said. "Whenever they get out there with too much money and let the public know that they're opposed to something, the public supports it."

The California Department of Insurance has not yet publicly endorsed the initiative. However, a representative in an email to SNL said Jones is "supportive of the concept" and still reviewing the details of the proposal.

Assemblyman Feuer declined to comment on the initiative, but reportedly plans to resume work in 2012 on his own bill to restrict rate-making.

Consumer Watchdog does not need the political backing, Court said, especially after watching similar proposals killed by the legislative process. Though its initiative still faces significant obstacles, the organization believes California's citizens will be willing to make the changes the government has so far resisted.

"The politicians have failed," Court said. "This is in the court of public opinion now."