Senate Committee Votes To Approve Amended Health Insurance Regulation Bill
The nine-member Senate Insurance Committee on Wednesday voted to approve a "watered down" version of a bill (SB 1349) that would require health insurers to pay a fee to fund a new state commission that would investigate ways to reduce health care costs, the Associated Press reports (Lawrence, Associated Press, 5/5). Originally, the bill, sponsored by Sen. Deborah Ortiz (D-Sacramento), would have required health insurers to seek approval from the Department of Insurance for any premium increases (California Healthline, 5/4). The measure also would have prohibited the Department of Insurance from approving any health insurance premium increases that were "excessive, inadequate or 'unfairly discriminatory,'" the Associated Press reports. However, committee Chair Jackie Speier (D-San Mateo) and Sen. Jack Scott (D-Pasadena) refused to support the original measure. Speier said that she is concerned about recent increases in health care costs but added that the measure is a "huge step. ... a step that I don't think there is evidence to support at this time." Scott said that he did not feel "comfortable making such a sweeping change."
"We are a very low-profit industry," Bob Scarlett, a lobbyist for Blue Cross of California, said, adding, "It's just a fact, no matter how many misstatements that some of the [legislation's] supporters have made." Bill Wehrle, a lobbyist for the California Association of Health Plans, said that the industry's profit margin last year was 2.96%, adding, "I can't think of another industry that has to defend a profit of 2.96%." However, Ortiz said that the original bill is necessary because "[w]e need to ask the questions. Are CEO bonuses appropriate? Are unlimited expansions of hospitals appropriate? ... The bottom line is [health insurers] need to disclose all of the costs they believe are permissible expenditures." Jerry Flannigan, a lobbyist for the Foundation for Taxpayer and Consumer Rights, said that the original bill would have controlled administrative overhead, which is "one of the biggest factors in rising health care costs," the Associated Press reports. "The market is uncompetitive and therefore we need someone to deny rates that are excessive, to go in there and look at the books and look at the numbers," Flannigan said (Associated Press, 5/5).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.