In the shadow of the elephant that is budget passage, the Senate held a hearing yesterday on legislation that also holds a lot of political weight — health care rate regulation.
“Of all the bills this year, and we’ve been involved in a lot of them, this one is the most important to us,” Gary Passmore of the California Congress of Seniors said at the hearing. “This one really matters.”
AB 52 by Assembly member Mike Feuer (D-Los Angeles) would take a step beyond the health insurance rate review that the state currently conducts. It would allow the state’s Department of Insurance and Department of Managed Health Care to alter or reject health insurers’ rate increases.
It passed the Assembly and yesterday was before the Senate Committee on Health. In an unusual move, committee Chair Ed Hernandez (D-West Covina) arranged yesterday’s hearing to be testimony-only, in an effort to air the many opinions about it. The actual vote on the bill is scheduled for next Wednesday.
Toward the end of the hearing, Hernandez gave a hint about the direction that vote might go — but it was only an indication, since the four-hour discussion itself was so contentious.
“Each of us has been inundated with complaints from our constituents about the dramatic rise in health care premiums,” Feuer said to the Senate committee. “Huge increases of 39%, 59% — and we have been powerless to grapple with these issues. At one point the Department of Managed Health Care rate review concluded that one of those big increases by Anthem Blue Cross was unreasonable, and Anthem went ahead with it, anyway. Now 120,000 Californians are paying what is demonstrably an unreasonable rate increase.”
That’s what Feuer wants to change with AB 52. If the state already has the administrative wherewithal to review rate increases and determine which ones are excessive, why shouldn’t the state be able to stop those excessive rate hikes, he asked.
“Unlike the majority of states, we are unable to effectuate that rate review,” Feuer said. “Now, many people say this bill doesnât solve every problem in health care. But I think the test should be: Will Californians be better off on the day after this regulation is passed? Or better off without it?”
The health insurance industry feels a little scapegoated by the well-publicized and eye-popping double-digit premium rate increases. Most of those increases came in the volatile independent market, a small percentage of the overall market, according to Charles Bacchi of the California Association of Health Plans.
“California’s premiums are at or below the national average,” Bacchi said. “In fact, the new federal law takes a lot of California’s principles, to try to bring down costs in the rest of the country.”
Insurers at the hearing were joined by several representatives of health careÂ provider groups, including Lisa Folberg of the California Medical Association.
“It’s a little strange to be at the same table, on the same side with insurers,” Folberg said. “But we do believe this bill will have unintended consequences. However dysfunctional our health care system is in California, it is still a system. And when you make a big change like this, many things can be affected.”
Folberg said physicians are worried about “cost shift,” which is the term used to describe how providers are reimbursed in California. Since physicians and hospitals lose money on Medi-Cal and uninsured patients, that loss is factored into their negotiations over reimbursement rates for fully insured patients.
“If commercial rates [for insurers] get squeezed, that will trickle down to physicians in the form of lower negotiated rates.” And in turn, those lower rates paid for insured patients will limit how many low-income patients can be included in doctors’ practices, Folberg said.
“It will end up that they’ll have to take fewer Medi-Cal patients,” she said. “And with so many more Medi-Cal patients in 2014, that could create a huge problem with access.”
Other criticisms of rate regulation included the concern that the bill doesn’t get to the root cause of rising health care costs, and that it might interfere with a smooth first year for the state’s health benefit exchange.
“It’s an extremely difficult issue,” Hernandez said. “That’s why we scheduled so much time for it, and why we will hold this for a vote next week.”
Several committee members expressed their reservations or reluctance about the upcoming vote — even health care maven Sen. Elaine Alquist (D-Santa Clara) said she was uncertain how she would vote on it next week, because of concern about the exchange.
It’s likely that Hernandez is the swing vote on the committee. He has generally supported health insurance rate regulation bills in the past, and he gave a small indication of purpose at the end of the hearing.
“I don’t know how I’m going to come down on this bill,” he said, but then opened the door.
“I do have some amendments to propose,” he said to Feuer. “And I look forward to working with you on it.”
It was a mild tell. But in general, amendments help move a bill toward passage. If the measure passes next Wednesday, it would then head to the floor.