California Health Insurance Health Care Costs

The Assembly and Senate California Health Insurance Committees held a hearing last week examining why health care costs continue to escalate.  The hearing included testimony from health insurance policy experts, hospitals, doctors, medical groups, pharmaceutical companies, purchasers and health insurance plans. Aetna insurance worked with other insurers to brief legislators for the hearing and testify regarding increasing costs and how health insurance rates are developed.  Overall the hearing was informative and did not repeat the combativeness of a similar hearing last year. The day was primarily focused on the facts relating to cost drivers and how they impact premiums.

In other news, the legislature was able to pass billions of dollars in budget cuts, on a bipartisan basis, as part of a budget bill and a series of trailer bills. The legislature, however, did not pass any controversial issues dealing with revenues, nor was it able to pass a bill that the Governor wants eliminating redevelopment agencies. The governor will continue to negotiate this week with Republicans over remaining issues, including whether enough Republicans will support a ballot measure to extend tax increases that are due to expire in July.  If negotiations do not result in a budget compromise, it is likely that the legislature could move to a Plan B approach – additional cuts in the neighborhood of $10 billion or putting a measure on the June ballot with a simple majority vote, which is likely to lead to legal challenges.

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