A bill would require state approval to raise premiums.
SACRAMENTO, Calif.: Fifteen years after California voters required auto insurers to get state approval before raising rates, Democratic leaders Tuesday introduced a measure that would subject health insurers to similar scrutiny.
Sen. Liz Figueroa and Senate President Pro Tem John Burton called SB 26 a response to skyrocketing health care premiums.
The measure is sponsored by The Foundation for Taxpayer and Consumer Rights, the driving force behind Proposition 103, the landmark 1988 auto insurance initiative. And it is likely to be vigorously opposed by HMOs.
Twenty-six other states have some jurisdiction over health insurance rates.
Under SB 26, before an HMO or health insurer could increase premiums, co-payment amounts or deductibles, approval would have to be obtained from the Department of Managed Health Care or the Department of Insurance.
The Department of Managed Health Care already has authority to approve HMO contracts with hospitals and medical groups.
SB 26 would require health plans to provide detailed financial information to regulators with each premium increase request.
Proposition 103 was placed on the ballot after legislative efforts were derailed. Figueroa, D-Sunol, said she is prepared for the same level of resistance from the insurance industry this time.
But she senses the industry may be politically vulnerable, and cites its failure to kill previous HMO reform measures it opposed.
In 1999, Figueroa pushed through SB 21, which gave patients the right to sue their HMOs for punitive damages for denying them medically necessary treatment.
“We’ve been able to go against (HMOs) and succeed because (our) constituency is calling for immediate action and we’re going to give it to them,” she said at a Capitol news conference.
Jerry Flanagan, of the Foundation for Taxpayer and Consumer Rights, said supporters are considering placing the measure before voters if legislative efforts fail.
“If we can’t get it done here and legislators agree, we’ll definitely go to the ballot,” Flanagan said.
Flanagan said spiraling health care premiums have resulted in a record number of uninsured people who work. Overall, an estimated 6.2 million people in the state do not have insurance.
The costs of health insurance for a family of four increased 250 percent more than the costs to the providers in 2002, Flanagan said, citing a study by the Kaiser Family Foundation.
William Wehrle, a lobbyist for the California Association of Health Plans, called those figures an “egregious misrepresentation.”
“The actual average profits for the industry are 1.6 percent,” Wehrle said. “Health plans make less than grocery stores.”
Wehrle said SB 26 does nothing to address factors driving up the costs of health care, including an aging population, medical innovation and new treatment and drugs.
But Jon Pastoria, a self-employed corporate recruiter in Los Angeles, said something has to be done.
Pastoria said monthly insurance premiums for his family of four jumped from $473 with no deductible to $743 with a $2,000 deductible in the past 18 months.
“Without a bill like this one, health insurance costs will continue to skyrocket and additional thousands of families will be uninsured,” Pastoria predicted.
Burton, D-San Francisco, said the measure also would help California’s general fund at a time when the state has a record budget shortfall.
“This bill is important to the taxpayers because as premiums from HMOs go up, (the state’s) contributions (to the state retirement system) increase,” Burton said.
Nancy Kramer, spokeswoman for Insurance Commissioner John Garamendi, said that as written the measure would be difficult to enact. But Garamendi will withhold comment until he completes a thorough review, Kramer said.
Flanagan dismissed fears that the bill will force HMOs to slash benefits and raise consumers’ out-of-pocket fees for doctor visits, drugs, and hospital care.
He said equally dire predictions were made after voters approved Proposition 103, establishing a prior approval system for auto, home and property-casualty insurance.
Flanagan said the measure instead created a more competitive market that benefited consumers. The percentage of drivers without insurance dropped by 38 percent in the following decade, he said.
(Distributed by Scripps-McClatchy Western Service, http://www.shns.com.)