Lewis & Ellis Inc.

California voters to decide on overhaul of health insurance rate-setting

Health Care Reform and Policy
by David Dillon
Several consumer protection and industry-strengthening laws are going into effect in California.
Several consumer protection and industry-strengthening laws are going into effect in California.

The regulatory controls states have over insurers' ability to set premiums has been a major issue in various parts of the country over the last several months or more. Now it seems that California residents could soon give their government the ability to have far greater oversight in this area.

The ballot question known as Proposition 45 would allow the state's insurance commissioner to more easily deny health insurance companies the ability to increase premium costs that he or she deems excessive, according to a report from the Los Angeles Times. Currently, there is no such law on the books for health coverage in the Golden State, despite the fact that there have been similar powers for home and auto insurance coverage there for nearly 30 years.

At present, 35 other states give their top insurance regulator the ability to deny these proposed changes, but California is not among them, the report said. Instead, the state's Department of Insurance and Department of Managed Health Care both oversee the health insurance industry, and while they certainly review rates from insurers before they're put into effect, they are not allowed to deny them for any reason.

What's the issue here?
Prop 45 itself would only allow a small number of people to actually be protected by the changes, the report said. The only rates that would be able to be vetoed by the insurance commissioner would be those charged to consumers who buy their own coverage, or receive their plans through a small business employer. Policies obtained through large employers, or people on Medicare or Medi-Cal, would not be able to receive such protections. In fact, only about 6 million residents would be affected by these rule changes.

But many in the insurance industry see that change as a slippery slope toward what could be more draconian oversight of the sector, and as such are pushing hard against it, the report said. On the other side of the issue, consumer advocates say that Prop 45 would be a solid, reliable way of keeping Californians' health insurance costs down.

Obviously, health insurance issuers will have to keep a close eye on developments in this regard, because any changes that come along could have a big impact on the ways in which they do business. Further, if Prop 45 passes, it could signal similar changes in the 14 remaining states without such oversight.



Consultants to Contact