Rate Regulation Injected into Debate on Health Care Reform
Assembly member Dave Jones (D-Sacramento) on Wednesday introduced legislation (AB 1554) that would require health insurers to obtain approval from state officials for annual premium increases above 7%, the Los Angeles Times reports.
Jones said he introduced the bill "to make sure affordability is injected into the debate" on health care reform.
Gov. Arnold Schwarzenegger's (R) health care reform proposal would require insurers to spend at least 85% of premiums on medical care, but outright regulation of health insurance rates is not part of the governor's plan or any other health care reform proposal that has been introduced this legislative session.
However, consumer advocates say that state regulation of health insurance premiums could strengthen all of the reform proposals currently under consideration.
The Foundation for Taxpayer and Consumer Rights, a supporter of the measure, says that insurers' profits between 2000 and 2005 have increased by 170%. According to the foundation, four insurers since 2002 have sent $3.2 billion of California premiums to their national parent companies as profit.
Senate Health Committee Chair Sheila Kuehl (D-Los Angeles) and Assembly member Hector De La Torre (D-South Gate) also have said they will back the measure.
Christopher Ohman, CEO of the California Association of Health Plans, said Jones' measure would place "a whole new administrative load on the health care premium" because insurers would have to justify their rates.
The bill has not received support from groups representing physicians or hospitals.
Dustin Corcoran, chief lobbyist for the California Medical Association, said the organization opposes the legislation because it could limit funds that physicians need to provide care (Rau, Los Angeles Times, 4/12).