Calif. Exchange Board Criticizes Insurance Rate Regulation Initiative

During a meeting on Thursday, Covered California board members expressed concerns about a ballot initiative that would give the state government regulatory authority over health insurance premium rates, and called for the board to issue a formal statement against the measure, the Sacramento Bee's "Capitol Alert" reports (Cadelago, "Capitol Report," Sacramento Bee, 8/21).

Background on Initiative

Proposition 45 -- which is being promoted by Insurance Commissioner Dave Jones (D) and Consumer Watchdog -- would give the state regulatory authority to monitor and control health care premium rates, similar to how it controls automobile and property rates.

In June, Covered California officials released a report raising questions about the initiative related to:

• The timeline for rate reviews;
• Implications for the 2015 plan year;
• Marketing and outreach;
• Rate changes that are not approved by the beginning of open enrollment;
• Subsidies for premiums; and
• Standard benefit designs.

The report noted, "Under the current timelines, there is very little flexibility in the event there are major delays" resulting from the initiative's proposed rate regulation process (California Healthline, 6/19).

Exchange Board's Comments

During a meeting on Thursday, Covered California board members expressed concerns about the initiative adding delays and confusion to the exchange's negotiations with insurers.

Board member Susan Kennedy said, "Even if you believe that rate regulation is the right thing to do, now is not the right time to make the job we are in the middle of any harder."

Kennedy proposed that the board "state clearly" that "there are problems" with implementing such a measure. She also asked permission to use her board title when campaigning against the initiative.

Board member Kim Belshé also said the board should state its stance on the initiative, noting that exchange staff has found "very significant, if not grave, concerns that Prop. 45 could be detrimental to the operations of Covered California and the consumers we serve."

However, Board Chair Diana Dooley, who also is secretary of the state Health and Human Services Agency, said becoming involved with the debate over Prop. 45 could hurt the exchange's reputation. She said, "I am just a little bit troubled that if we take a formal vote on this measure that we then get even more wrapped up in the campaign."

Reaction

Covered California Executive Director Peter Lee said the board should be careful when determining whether to take a position on the initiative.

Meanwhile, Consumer Watchdog President Jamie Court said the board should not get involved in campaigning against the measure ("Capitol Alert," Sacramento Bee, 8/21).