California Health Insurance Rate Amendments

Extensive California health insurance amendments have been made to the rate regulation bill, which will be heard this week in policy committee.  This version of the bill goes beyond the Prop 103-style rate regulation, and appears to be a conglomeration of rate regulation and the rate review bill enacted last year. As expected, the proposal contains fees, penalties, administration fees and other regulatory powers designed to enact additional price controls on insurers beyond the medical loss ratio (MLR) requirements of the federal law. Consumer activists are pushing fees, which are levied on insurers and paid to consumer groups arguing against filed rate increases. In the past seven years, consumer groups have been paid more than $10 million by property and casualty insurers to oppose premium increases. In the past, similar legislation has been defeated by developing a coalition of health plans, hospitals, providers and business groups to educate lawmakers on the drawbacks of this approach. Similar efforts are being organized this year.

In budget news, Governor Jerry Brown has officially called off negotiations with Republicans over a proposed June 2011 ballot measure that would decide whether to extend tax increases for an additional five years. The Governor has declared the Republican list of demands, including state pension reform, spending caps and regulatory relief, as too much to accomplish by the ballot deadline. The Governor and legislature will now consider Plan B, which is said to consist of additional budget cuts and a ballot initiative in either November or June. Going ahead with a June ballot initiative would require proceeding without Republican support by a simple majority vote — and the majority vote is likely to be challenged in court as unconstitutional.

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