Assembly OKs Amended Bill Capping Insurers’ Administrative Costs
On Tuesday, the California Assembly voted 41-26 to approve legislation that would require health insurers to spend 85% of premiums and other fees on patient benefits, the AP/Los Angeles Daily News reports.
Administrative expenses, profit, broker commissions and other fees would be capped at 15% under the bill (SB 1440) by Sen. Sheila Kuehl (D-Santa Monica). The measure would allow state regulators to waive the limits on new health plans during their first two years of operation.
Assembly member Hector De La Torre (D-South Gate) said the waiver provision offers a needed exemption for advertising and other start-up costs.
Republicans largely opposed the measure, arguing that it would deter insurers from entering the California market and discourage health plans from making improvements to products.
The bill now goes back to the Senate for consideration of Assembly amendments.
A spokesperson for Gov. Arnold Schwarzenegger (R) said that the governor has not taken a position on the bill but noted that Schwarzenegger's health care reform plan also proposed capping insurers' administrative expenses at 15% (Lawrence, AP/Los Angeles Daily News, 8/19).