Bill Aims to Limit Rate Hikes to One a Year

Beth Capell could barely contain her disbelief at the idea — that health plans and insurers suddenly might offer to lower their rates. And that they’d do that twice in one year.

“Not once in a blue moon,” she said.

Capell, policy advocate for Health Access California, was speaking at Wednesday’s Senate Health Committee hearing, presenting her side of what seemed like a relatively straightforward bill. AB 2042 (Mike Feuer, D-Los Angeles) seeks to prevent health plans and insurers from raising rates more than once a year.

The legislation was prompted in part by the recent spike in health plan rates, particularly the aborted attempt by Anthem Blue Cross to raise rates by an average of 25% and as much as 39% in California.

“We have seen in recent months multiple health rate changes,” bill author Feuer said. “Especially in these times now, it’s important to provide some stability for the consumer, so consumers know what their premiums are.”

The bill allows health plans to raise rates only once in a 12-month period. Capell said that insurance companies not only routinely raise rates once a year, but that they often plan to raise rates on an insured person’s birthday, as well — because every 5 or 10 years, people enter a new age bracket in their insurance plan, a less desirable and more expensive age bracket.

“People need to know what their premium and costs and co-pays are going to be,” Capell said. “No one should get a present of raising rates for their birthday.”

The legislation stalled, though, when Senate committee members brought up language in the bill that left open the idea that California might not only limit rate increases, but that it could conceivably limit rate decreases, as well.

The language said health plans shall not “alter” rates more than once a year. So, if health plans or insurers want to decrease rates without cutting benefits, twice in a 12-month period, that language could get in the way of that.

That one-line amendment will be made in the next few days, and Senate Health chair Elaine Alquist said  AB 2042 will be back on the agenda next week, for a voice vote rather than a full-fledged hearing again.

But that small tweak is not the reason insurance plan representatives converged on Sacramento on Wednesday. They were more upset about the prospect of regulatory limits. It’s not as if these “birthday” rate hikes happen every birthday, said Steve Lindsay of the California Association of Health Underwriters.

“We find ourselves in a tough position,” Lindsay said. “Folks get older. The way premiums are raised is age brackets of 5 or 10 years, not every year. If you wait till the end of the year (to charge an age-tier rate increase on top of an annual increase), the rate hike could be substantial. There should be an allowance for an age rating increase.”

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