Garamendi Might Pursue Increase in Percentage of Premiums Insurers Must Spend on Care

Insurance Commissioner John Garamendi (D) at a hearing on Thursday said he might seek to increase the percentage of premium dollars that insurers must spend on medical care under state law, the Los Angeles Times reports. The rate currently is 50% for individual-plan premiums.

At the hearing, Garamendi questioned executives of five health insurance companies about premium costs, which have increased by 60% over the last four years, saying that "many insurers continue to enjoy very healthy profit margins." Such increases have led more employers and individuals to drop health care coverage, Garamendi said.

Blue Cross of California Regional Vice President Ann-Louise Kuhns said that a number of new plans offering lower premiums and higher deductibles or limited benefits temporarily have reduced the percentage of premiums spent on health care. The rate is expected to increase as members remain with the insurer.

However, Garamendi said he believed health care spending for individual plans was less than that for employer-sponsored plans because individuals do not have the purchasing power to get better deals. He added that he might seek an increase in the percentage of individual-plan premiums spent on medical care to address that.

Jamie Court, president of the Foundation for Taxpayer & Consumer Rights, said he questioned whether Garamendi, who is running for lieutenant governor, would have enough time to implement a new regulation before his term ends next year (Girion, Los Angeles Times, 12/2).