Schwarzenegger, Democrats Negotiating Health Care Actions

Gov. Arnold Schwarzenegger (R) is nearing agreements with Democratic lawmakers on measures that would tighten rules on health insurers, the Los Angeles Times reports.

For example, Sen. Sheila Kuehl (D-Santa Monica) says she is "very near" an agreement with the governor on legislation that would require insurers to spend at least 85% of premium income on medical care.

Aides to the governor have requested that the bill (SB 1440) be amended to exempt new types of health insurance coverage from the 85% threshold for the first two years that they are available.

In addition, Schwarzenegger is in talks with Sen. Darrel Steinberg (D-Sacramento) over changes to SB 1522.

The bill would require individual health insurance policies to cover physician services, preventive care and hospital services. It also would cap member's annual out-of-pocket costs and require state regulators to classify health plans into five categories, in hopes of making it easier for consumers to compare health insurance options.

Gov. Schwarzenegger has asked Steinberg to drop the coverage mandates from the bill and keep it focused on categorizing health plans.

Three bills dealing with health insurance policy rescissions also are making their way through the Legislature.

Democrats want to require insurers to seek state regulators' approval before rescinding policies and permitting rescissions only in the first 18 months that a member has a health insurance policy.

Schwarzenegger is in favor of insurers retaining the ability to rescind policies, but he wants to create a process that would have independent arbitrators determine whether insurers could rescind coverage. He also supports creating new rules intended to boost insurers' review of applicants' medical histories.

The governor's health care reform proposal included many of the proposals as elements of a larger plan to expand health insurance coverage to most Californians. A Senate committee rejected the proposal in January.

Although most insurers endorsed the governor's overall proposal, the health insurance industry opposes the proposals under consideration on a one-off basis, arguing that the measures would drive up premiums and lead to more people losing health insurance coverage (Rau, Los Angeles Times, 8/4).

Highlights of other recent action on health insurance regulation in California appear below.

• 'Balance Billing': On Friday, the Department of Managed Health Care announced that it has completed new regulations aimed at limiting "balance billing" in emergency care situations. Balance billing occurs when health care providers bill patients directly for medical charges that health plans do not cover. The new rules permit DMHC to take action against providers who use balance billing (Glover, Sacramento Bee, 8/2).
• DMHC Authority: Also on Friday, the governor vetoed a bill (AB 1155) that would have widened DMHC's authority to fine health insurers that did not pay medical bills. Schwarzenegger said the bill was aimed at sidestepping DMHC's independent dispute resolution process (Los Angeles Times, 8/2).