Regulation of Rising Health Insurance Rates Passes Assembly;

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Bill By Asm. Dave Jones Is ‘The Proposition 103 of Health Care’

Sacramento, CA — The California Assembly today approved a bill that would bring health insurers in line with other kinds of insurance in California, requiring companies to defend and get permission for increases in their premiums. The bill, AB1554 by Asm. Dave Jones, will protect Californians against double-digit yearly health premium increases and outrageous fees and co-pays, said the Foundation for Taxpayer and Consumer Rights.

The bill faced ferocious opposition from insurance companies, said FTCR, congratulating the Assembly majority that stood up to the corporate pressure, as well as attempts by Gov. Arnold Schwarzenegger to kill the bill before it proceeds to the Senate. AB1552 faces the same opposing forces in the Senate, but if passed intact by both houses it will be difficult for Schwarzenegger to veto.

“California insurance companies are funneling billions of dollars to out-of-state corporate owners, even as health insurance premiums increase at a rate far ahead of medical inflation in general,” said Jerry Flanagan, health policy director of the nonprofit, nonpartisan FTCR. “Without enactment of this bill, companies like Blue Cross, which mailed off nearly $1 billion of its California profits to a parent company in Indiana over three months, will keep using California health insurance purchasers as their corporate ATM.”

Public review and regulation of rate increases is the underpinning of other proposed health care reforms, said FTCR. The group noted that when California’s auto insurance rates became the second most expensive in the nation, Proposition 103 cut rates and California fell to 21st in the pack even as costs soared in other states. The rate regulation of AB1554 would do the same for health insurance, while preserving the kind of vibrant, competitive market that rules auto insurance.

Proposition 103 has saved California drivers substantial money since its approval by voters in 1988:

– California auto insurance rates decreased 7% between 1989 and 2004 while average national rates increased 47%.
Prop 103‘s provisions have saved drivers $23 billion, as reported by the Consumer Federation of America.
– California was the 2nd most expensive state for auto premiums in 1989 and fell to 21st by 2004.
– Consumer interventions in rate proceedings have blocked unfair rate hikes and lowered excessive rates, saving drivers $204 million, and doctors and homeowners another $596 million.

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The Foundation for Taxpayer and Consumer Rights is a leading nonprofit and nonpartisan consumer watchdog group. For more information visit us on the web at:

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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