Students with parents who have health insurance can now stay on their plans until they are 26, thanks to the Affordable Care Act. But when young people strike out on their own as app developers, artists, therapists, graphic designers or any other kind of entrepreneur looking to buy their own insurance, they will discover California is still the Wild West.
Runaway hikes in health care premiums have slammed individuals and small businesses. Health insurance premiums in California have risen 185 percent since 2002 — five times faster than the rate of inflation. Recently, state regulators deemed $250 million in proposed rate hikes for individuals and small businesses “unreasonable,” but they had no power under state or federal law to stop them.
By law, we all have to buy health insurance, but nothing requires that health insurance be affordable. That guarantee is the missing piece of the Affordable Care Act. Proposition 45 gives California the power to reject excessive rate hikes and stop insurance company rip-offs, just like 35 other states have done.
Proposition 45 requires health insurance companies to open their books and justify rate hikes before raising rates on 6 million individuals and small businesses. It makes the elected insurance commissioner the umpire over whether rate hikes are excessive. It creates transparency and accountability, including requiring health insurance company CEOs to request permission for rate hikes under penalty of perjury.
State regulators with the power to veto rate hikes in Oregon, Connecticut and New York recently delivered big rate reductions to policyholders on their health exchanges. The state health exchange needs the same leverage for its 1.2 million enrollees. Prop. 45 also protects an additional 4.8 million individuals and small businesses that don’t get subsidies on the exchange and need rate relief even more. That’s why Senators Dianne Feinstein and Barbara Boxer back it.
It’s also why health insurance companies have unrolled a deceptive media campaign against Prop. 45 that is costing $37.5 million and counting. They’re hiding their exclusive bankrolling of the No on 45 effort in radio and TV ads by never saying that “health insurance companies” back the ads.
Surrogates such as the business club Bay Area Council, whose board includes health insurance CEOs from Kaiser and Blue Shield, don’t disclose they are paid or have financial ties to the industry. They pen opinion pieces making false claims that voters have to choose between a state bulk purchasing pool (Covered California) for 1.2 million consumers and rate regulation for a total of 6 million individuals and small businesses. Prop. 45 retains both and does nothing to diminish Covered California.
These surrogates allege that Prop. 45 will allow the insurance commissioner to interfere with your benefits or override rates set by the exchange. The claim is a scare tactic health insurance companies hope will distract voters from Prop 45’s rate relief. In truth, no federal or California state agency has the power to reject excessive rates so no decisions can be overridden.
The insurance companies also want us to believe that voluntary government negotiations can keep rates low. But how can the free market constrain health insurance company greed when just four companies control 94 percent of the market of the purchaser? Prop 45 creates rate regulation that will complement the purchasing of the exchange.
Health insurance companies need these false mouthpieces and misinformation because they know the public will support Prop 45 when they learn insurance companies oppose it and it will stop the health insurance ripoffs. Why else would health insurance companies be spending tens of millions to defeat Prop 45?
The health insurance industry’s claim that Prop 45 will give too much power to the insurance commissioner, while he takes millions in contributions from “special interests,” is especially ironic given that it is coming from the state’s highest-spending special interest. In truth, no elected insurance commissioner has taken a dime from insurers since 2002, as opposed to the governor and lawmakers who appoint the exchange’s board.
Prop 45 simply extends to health insurance rates the successful regulation for auto and home insurance that voters enacted in 1988. California drivers now pay less in real dollars for insurance than they did 25 years ago – the only state with such success.
Key to auto insurance reform’s success was not only creation of the office of elected insurance commissioner, directly accountable to the voters for lower rates, but also the same consumer participation system that applies to electricity rates. Consumers can challenge unreasonable auto, home and business insurance rate hikes. Since 2012, over $3 billion in proposed rate hikes have been stopped by consumer group challenges.
Rate relief has proved an undeniable consumer triumph for drivers. Those required to buy health insurance under federal law deserve the same protection. Health insurance companies gave $37.5 million to stop Prop 45 because they want consumers to remain at their mercy. Don’t let them.
Carmen Balber is Executive Director of Consumer Watchdog.