Health insurance bill’s passage could spur rate cap proposal

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Los Angeles Business Journal

First it’s employer mandated health care. Next may be tighter controls on premium rate hikes.

Following enactment of SB 2, the state’s landmark play-or-pay health insurance law, the Foundation for Taxpayer and Consumer Rights is considering an initiative that would subject California HMOs to the tightest rate regulations in the nation.

The foundation has drafted an initiative that would require health maintenance organizations and other health insurers to get “prior approval” before raising their premiums. That’s similar to what automobile insurers must receive under Proposition 103, the 1988 initiative also authored by the

“We know that the public is most concerned about the cost of health care, and that is the main thing that was not addressed in SB 2,” said Executive Director Jamie Court.

Prior approval has been pushed by the foundation for years, but it’s strongly opposed by business interests. Court now believes things could change under SB 2, which requires employees to provide health coverage or pay into a state fund.

“We now have employers who will be incentivized (to support this) or otherwise they will be paying more,” he said.

The foundation contends that the experience in Hawaii, which has had a play-or-pay system for 30 years, supports the argument that without price controls employer health care mandates drive up premiums. Hawaii’s premium increases far exceed the national average.

California is one of 24 states that have no form of rate controls, while 10 states require prior approvals before rate increases can go into effect.

The foundation has already drafted several versions of the initiative, and must decide by the end of November whether to submit one to the Attorney General for review in order to have time to place the measure on the November 2004 ballot, Court said.
Staff reporter Laurence Darmiento can be reached at (323) 549-5225 ext. 237 or at [email protected]

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