California mulls options to limit health insurance rate increases

The Patient Protection and Affordable Care Act obviously brought with it sweeping changes for the health insurance industry, but at the same time, it also impacted the ways in which government agencies in that sector must operate. Now, California is looking at just how big of a change this created, and what it might have to do in the near future to keep up with the new and emerging realities.

California voters may soon have the ability to cast their ballots on a new proposal known as Proposition 45, which would give the state's insurance commissioner significant new power to nix proposed rate increases from health insurance policy providers, according to a report from the Los Angeles Times. At present, the agency only has the power to say that proposals are “unreasonable,” but not to put any kinds of limits on them.

Statewide, some 1.4 million people were able to successfully sign up for coverage through the ACA's mandated health insurance exchanges – which California runs itself – and some critics of the proposal say that implementing it might result in an adverse cost effect for those people, the report said. However, proponents say that without the ability to regulate rate increases in the future, the agency may not be able to uphold the “affordable” part of the Affordable Care Act.

What would the impact be?
The insurance commissioner's office has officially designated 14 proposed rate increases as being excessive since 2011, the report said. On the one hand, those affected are only a small number of state residents altogether, totaling just 934,000 people. However, it's also important to note that those policies combined to cost the affected consumers $253 million. In addition, it should be noted that Californians have seen their health insurance premiums increase 185 percent since 2002. For their part, insurers say that the health care law provides enough regulation already, and that any additional strictures put on them by the ballot initiative would be too overbearing.

However, health insurance providers might want to keep in mind that this could be part of a new trend in their industry. As government agencies take a more active role in regulating the industries they oversee, there might be more scrutiny for them to deal with in the coming years, and beyond.