Prop. 45 Targets Health Rates

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 Financial adviser Larry Leisenring experienced a sharp increase in the cost of his health insurance and was forced to switch to a new plan last year. Proposition 45 would give the insurance commissioner the authority to reject premium increases.
Larry Leisenring, a San Clemente resident, knows something about unwelcome increases in the cost of health care.

Prop. 45 support slips

Results of three polls released over the past ten days:

Field Poll: 30% for, 42% against

Public Policy Institute of California: 39% for, 46% against

Hoover Institution: 42% for, 30% against

When new benefit requirements of the Affordable Care Act took effect on Jan. 1, he lost a health plan he liked and ended up with one that doubled his deductible and his annual out-of-pocket liability for medical bills. And it still cost him $100 more a month.

“To be honest, I felt betrayed by the president,” says Leisenring, an investment and insurance broker.

The Affordable Care Act has been a godsend for millions of previously uninsured Americans. But for millions more, like Leisenring, it has raised the cost of health care.

Enter Proposition 45, whose advocates – chief among them, Santa Monica-based Consumer Watchdog – say it will put the word affordable back in care by giving the state’s insurance commissioner the authority to reject proposed health premium increases he deems excessive.

The current commissioner, Dave Jones, already has the power to regulate premiums for home, auto and medical malpractice insurance, due to the landmark Prop. 103, which California voters passed 26 years ago. But his range does not extend to health insurance companies. The state’s other health insurance regulator, the Department of Managed Health Care, also has no such power.

Prop. 45 expands the language of Prop. 103 to include health insurance that is sold to individuals and small businesses, though not large employers. It would be retroactive to 2012, which means insurers could be required to pay refunds on premiums they’ve already been collecting for two years.

As it enters the home stretch of this fall’s election campaign, however, two polls show the contentious ballot initiative losing steam.

A Field Poll released Friday showed Prop. 45 losing 42 percent to 30 percent among likely voters, with 28 percent still undecided. That is a sharp reversal from Field’s September survey, in which the measure led by a margin of 41 to 26, and especially from July, when it held a whopping 69-16 advantage.

A Public Policy Institute of California poll of likely voters published last week showed the measure losing by seven percentages, after it had led by 10 points a month earlier. One poll, published earlier this week by Stanford University’s Hoover Institution, did show Prop. 45 leading by a margin of 42 percent to 30 percent.

Maybe it should come as little surprise that the “yes” on 45 forces have been dislodged from the political heights they commanded over the summer. The measure’s opponents have so far raised $56 million, about 15 times more than Consumer Watchdog and its allies have managed to scrape together, according to data from the state’s Fair Political Practices Commission.

The same data show almost all of that money has come from four large insurance companies: Kaiser ($18.9 million); Wellpoint, the parent company of Blue Cross of California ($18.9 million); Blue Shield of California ($12.5 million); and Health Net ($5.5 million).

“When the opposition is spending 15 times more, voters are not going to have a balanced view of the pros and cons of the measure,” says Daniel G. Newman, president and co-founder of Maplight, a nonpartisan research organization that tracks money in politics. “These groups wouldn’t be spending millions of dollars on advertising if it didn’t have an impact.”

To be fair, the “no” on 45 people have assembled a large – and unlikely – coalition that extends well beyond the health insurers.

It includes several labor unions and pro-business groups, as well as the hospital industry, doctors’ groups and virtually every medical association in the state. Civil rights groups such as the NAACP and the U.S. House Democratic Party leader, Nancy Pelosi, D-San Francisco, have also weighed in against the measure.

Many in organized labor, and in the business community, fear rate regulation could interfere with the availability or affordability of health plans for workers.

Doctors worry that caps on premiums would mean caps on their income. And most opponents of the measure object to the creation of what they term an “insurance czar.”

On the “yes” side are a number of unions, consumer groups and other nonprofits, in addition to the California branch of the National Organization for Women and the state’s Democratic Party establishment, including U.S. Sens. Dianne Feinstein and Barbara Boxer and insurance commissioner Jones.

They see a gaping need to rein in health insurance premiums, which by one measure rose 185 percent between 2002 and 2013, according to the California HealthCare Foundation. And they cite Prop. 103 as a successful precedent for doing so.

A study by the Consumer Federation of America shows that California drivers have saved more than $100 billion on auto insurance rates since the passage of Prop. 103 and that auto premiums have actually fallen in California over that period even as they rose 43 percent across the United States.

“It’s a very powerful argument for providing the same protections to health insurance consumers,” says Carmen Balber, executive director of Consumer Watchdog.

The measure’s opponents say rate controls on auto and homeowner coverage do not translate to health care, in large part because Covered California, the state’s health insurance exchange, already negotiates rates with the insurers and is motivated to get the lowest premiums possible.

The “no” side has used its overflowing war chest to run hard-hitting ads – and a counter-intuitively named website, StopHigherCosts.Org – that warn the measure would undermine Covered California by superseding rate negotiations it had already conducted with the health plans and delaying approval of those plans beyond the enrollment deadlines.

They also accuse Commissioner Jones of a “power grab” and assert that the ballot initiative would put him and his successors between patients and their doctors by allowing them to interfere with treatment decisions.

Particularly galling to the anti-45 coalition, or at least to the health insurance companies that are financing it, is a provision – also in Prop. 103 – that allows third parties to file rate hike challenges and recover their costs through fees paid by the insurers. Consumer Watchdog has been the principal beneficiary of these “intervenor” fees under Prop. 103.

“For those of us who would like to see health reform, Proposition 45 sets us back, and it does so while lining the pockets of the people who put it on the ballot,” says Robin Swanson, spokeswoman for “no” on 45.

Covered California is also wary of the measure. Its executive director, Peter Lee, told a state Assembly committee in July that Prop. 45 could compromise the exchange’s ability to negotiate with the health plans if they thought the insurance commissioner would “second guess” the agreed-on rates. And Lee fretted that the rate-approval process could take too long, leading to a situation in which “a rate isn’t approved and can’t be used for open enrollment.”

Consumer Watchdog refutes that argument and every other criticism thrown its way, and it has resorted to some pretty strong tactics of its own.

On Wednesday, the group dumped wheelbarrows of steer manure outside a meeting of health insurance executives in San Francisco to “return some of the B.S. companies are dishing out to voters on Prop. 45.”

Balber dismisses the notion that Covered California could miss its deadlines.

“The insurance commissioner, under Prop. 45, will write guidelines requiring every rate review and final decision to be completed in time for open enrollment,” she says. “It’s as simple as that.”

And she rebuts the charges of financial self-interest, saying that Consumer Watchdog is representing ordinary residents who don’t have the financial firepower to match the insurance companies.

The state’s medical establishment is lined up heavily against Prop. 45, out of fear that it could hit the financial interest of doctors and make them less available to patients.

“If the commissioner cut premiums in half, it would cut payments to physicians in half,” says Sam Fink, an internist and past president of the Los Angeles County Medical Association. “So by cutting premiums you can affect the size of a network and how many physicians participate.”

But some doctors think Prop. 45 is a much needed check on insurance companies that will help the Affordable Care Act live up to its name.

“I think it would help lower costs, which would allow more people to have access to health insurance,” says Bill Honigman, an emergency room doctor at two Orange County hospitals.

Contact the writer: 714-796-2440 or [email protected]

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