Assembly Health Panel OKs Bill Requiring State Approval of Rate Hikes

On Tuesday, the Assembly Health Committee voted 11-3 to approve a bill (AB 2578) that would require health insurance companies and HMOs to get approval from state agencies for any premium rate hikes exceeding 7% a year, the Los Angeles Times reports.

Under the legislation, insurance companies and most preferred provider organizations would have to get approval from the Department of Insurance. HMOs would have to obtain approval from the Department of Managed Health Care.

The state agencies would be responsible for ensuring that the premium increases are "not excessive, inadequate or unfairly discriminatory," according to the bill. 

The legislation, sponsored by Assembly member Dave Jones (D-Sacramento), is similar to a bill passed by the Assembly in 2007 that eventually failed in the Senate.

Support

Supporters of the bill believe that the legislation will be successful this year because of the recent passage of national health care reform and public outrage over Anthem Blue Cross' decision to raise premiums by as much as 39% on some individual policies.

The bill is supported by:

• AARP;
• Consumer advocacy groups; and
• Labor unions.

Opposition

The legislation is opposed by:

• Insurance companies;
• The California Medical Association; and
• Anti-tax groups.

Anne Eowan -- vice president of government affairs for the Association of California Life and Health Insurance Companies -- said that hospitals, doctors and pharmaceutical companies, not the insurance industry, are driving up health care costs (Lifsher, Los Angeles Times, 3/24).