Senate Passes Rate Regulation Bill

In a floor vote yesterday, the state Senate passed a bill designed to regulate the size of health insurance rate increases in the large-group market.

Under SB 1182 by Sen. Mark Leno (D-San Francisco), the state would review any large-group premium rate increases by health plans and insurers that exceed 5% of the previous year’s rate.

Large employer groups are those with enrollment exceeding 1,000 lives.

“While we’ve made progress in recent years to improve the state’s review of health rates for small group and individual purchasers, there is a significant gap in scrutiny of the large employer market,” Leno said in a written statement.

“This legislation will help ensure that California consumers, workers and businesses have information at their fingertips that explains health care rate spikes,” Leno said.

The bill also establishes new data reporting requirements for insurers in the large-group market. Insurers would be required to file annual disclosures of the number and percentage of rate filings, the changes in average rate increase and benefits, and how many people are affected by those changes.

“In the past decade, employers and employees have seen their health premiums increase dramatically often with little or no scrutiny of how rates are decided,” Leno said.

SB 1182 would change that, Leno said, though it does not give the state the authority to deny rate increases. California voters will have a chance to weigh in on that question with an initiative on the November ballot that seeks to give the state insurance commissioner veto power over health insurance premium hikes considered unreasonable.

The bill now heads to the Assembly.