Will Rate Regulation Return to Legislature?

What’s next after Proposition 45? Will the subject surface again in the Legislature? California voters yesterday rejected the proposal to give the state insurance commissioner power to deny health insurance rate increases deemed excessive.

“I’d be surprised if it wasn’t back in some form,” said Micah Weinberg, senior policy adviser at the Bay Area Council.

“Probably as a piece of legislation rather than a ballot measure again,” Weinberg said. “Theoretically, you could come up with a rate regulation proposal that could get some support. But I just don’t know if there’s an appetite [among legislators] to do it.”

Regulating the health insurance industry has had a lot of traction in the Legislature with passage of legislation to establish medical loss ratios for health insurers and a bill by Sen. Mark Leno (D-San Francisco) to review any large-group premium rate increases by health plans and insurers that exceed 5% of the previous year’s rate.

Giving state regulators the power to deny health insurance rate increases has surfaced a number of times in the Legislature, most recently in 2011 with AB 52 by then-Assembly member Mike Feuer (D-Los Angeles).

Weinberg said legislation could certainly be crafted to enact some form of rate regulation, but that the defeat of it in previous Legislature battles and in the general election could deter politicians from taking it on.

“If you look at other rate regulation in other states, there is a method of doing this that would be more in line with health care reform,” Weinberg said. “This [election defeat] may very well have poisoned the well. People will hear rate regulation and think Prop. 45, rather than an approach that might be a more measured proposal.”

Weinberg said a more measured approach would exclude the intervenor process, and likely would charge the Department of Managed Health Care with rate regulation, rather than the Department of Insurance.

“The intervenor process is as far as you need to go,” Weinberg said. “In general, this [Prop. 45] effort was not really coordinated with health reform in the state.”

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