Health Insurance Rate Regulation May Be On November Ballot

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The contentious issue of regulating California's health care insurance industry is back.

After AB 52 by Mike Feuer (D-Los Angeles) and Jared Huffman (D-San Rafael) was shelved at the end of the last legislative session, that looked like the final word on the prospect of regulating health insurance rates.

Yesterday, Consumer Watchdog filed paperwork to take health insurance rate regulation to the voters.

There are some differences between the proposed ballot measure and AB 52, according to Jamie Court of Consumer Watchdog.

"This one's stronger," Court said. "It requires that the health insurance industry file requests for rate increases under penalty of perjury. And it gives refund authority, too, if the rate's too high before it's reviewed."

The consumer group actually filed two ballot initiatives — one that leaves out large-market insurance rates, Court said. "One excludes the large-group market altogether," he said. "We haven't decided which one we're going to go with."

According to the California Association of Health Plans, this ballot measure is misguided. "Facing defeat four times in the Legislature and amidst mounting statewide opposition," Charles Bacchi of the CAHP said in a statement, "tone-deaf Consumer Watchdog is back again with yet another deeply flawed policy proposal that is ultimately designed to line their pockets with cash from expensive lawsuits.”

California has a bifurcated system to review health insurance rates, divided between the Department of Insurance (which handles mostly individual market and small-business insurance) and the Department of Managed Health Care (which has the large-group market).

The proposed ballot measure would allow the Department of Insurance to act on the rate reviews it already does. In the case of the proposed measure that would regulate some large-group rates, the DOI would take over rate review from the DMHC.

"DOI is better equipped because they do it for every other line of insurance," Court said, such as automobile insurance regulation. "We want to give new prior approval regulatory power to the DOI, to allow the Insurance Commissioner to conduct rate reviews. We're not touching the bifurcated system. This is only about rate regulation, it doesn't touch anything but rate regulation."

The perjury aspect is particularly appealing to Court, he said. "If a health insurer is going to submit something under penalty of perjury, you can bet it's going to be accurate," Court said. "A lot of this is deterrent, really. The key thing here is the power, not the paperwork."

Once the initiative's language is approved by state officials (expected in January), the group that orchestrated the successful campaign to regulate auto insurance rates in California has until May 1 to collect 504,760 signatures to get health insurance regulation on the November ballot.

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