Federal Officials Take Non-Stance on Rate Regulation

This year, few bills have stirred as much vitriolic rhetoric as the proposed health insurance rate regulation law, AB 52 by Assembly members Mike Feuer (D-Los Angeles) and Jared Huffman (D-San Rafael).

Now the statewide spat threatens to draw in federal officials, and they’re having none of it.

It all revolves around a recent report from HHS, which concluded that California’s current health insurance rate review is “effective.”

“AB 52 is not needed, according to the federal government,” said Pat Johnston of the California Association of Health Plans. “It will just make it more difficult for all consumers to get quality care.”

There are a couple of problems with that point of view, though. First, HHS was not singling out California, but included it as one of 33 states that had an effective rate review system.

More to the point, federal officials said rate regulation has little to do with rate review, and that endorsement of review does not mean criticism of regulation. That’s entirely a state issue, HHS representatives said in phone conversations and email exchanges.

“We applaud state efforts to provide an effective rate review program for their insurance consumers that meet the criteria outlined in the Affordable Care Act,” an HHS spokesman said in a written response to email inquiries.

“Many states’ laws and programs exceed the standards set forth in the ACA and our regulations, and we encourage all states to continue their efforts to ensure that rates charged to health insurance consumers in their state are reasonable.”

Johnston said it’s not as simple as that.

“The evidence from the HHS secretary in Washington is that the current rate review is effective in all markets,” Johnston said. “Proponents of AB 52 have frequently said that, in order to implement federal health care reform, we need to pass AB 52, and that’s just not true.”

State Insurance Commissioner Dave Jones (D) has a different view of what’s true.

“Currently, the health insurance companies hold all the cards when it comes to deciding how high and how many times to raise health insurance rates each year,” Jones said.

“A key problem with our existing system is that the insurance commissioner lacks the authority to reject excessive health insurance rate increases. It’s clear that California’s families and businesses need relief from excessive health insurance rates,” he said, adding that AB 52 would allow his department “to reject excessive rate increases and protect hard-working Californians from an unrelenting barrage of health insurance premium increases.”

AB 52 cleared Assembly hurdles and recently passed through the Senate Committee on Health. Next, it will go before the Senate’s appropriations committee in mid- to late August, after the Legislature returns from summer recess.