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Health Reform Legislation Advances

Insurance Commissioner could deny increases to health insurers under one bill

Dave Jones, California's insurance commissioner, can deny rate increases requested by auto and life insurance companies. But his office has never had the authority to say "no" to health insurers when they file for rate increases. That could change this year.

On Tuesday, the Assembly's Health Committee passed AB52, a bill that would give the commissioner the authority to deny rate hikes. The bill, sponsored by Assemblyman Mike Feuer (D-LA), faces strong opposition from the health insurance industry and has strong support from consumer advocates.

Bonnie Burns, a policy analyst for California Health Advocates, a statewide Medicare policy group, said the bill is “unprecedented in California.” The group wrote a support letter to legislators urging support for AB52.

“I’ve been doing this a long time and it seem absurd to me that the chief regulator in the state has no authority over rates that companies charge,’ she said. “How else can a regulator protect consumers?”

Burns noted that last year, Blue Cross filed for a rate increase that was halted only after then commissioner Steve Poizner hired an independent actuary to scrutinize the company’s calculations behind the rate increase. “Lo and behold, what did they find?” she said, “The calculations the company was using to justify the rate increases were errors.”

A series of widely publicized health insurance rate increase requests since January have made the rate regulation issue a high profile one. Jones asked four insurance companies to delay enacting rate increases for two months so his office could review their requests. And last month Blue Shield of California and Anthem Blue Cross delayed or slashed rate increases to some of their policies under scrutiny by Jones’ office.

But the California Association of Health Plans, the insurance industry lobby, called AB 52 “unnecessary” and the wrong solution to health care cost increases. In a press statement, CAHP President Patrick Johnston said that, “AB 52 offers no relief to the underlying cost pressures that are driving up the cost of health care, which drive up the price of health insurance. Premium increases are just a symptom of a much bigger problem.”

Johnston wrote that consumers already have new rate protections from a previous bill, SB1163, which requires insurers to file rate changes and independent certification for them with state regulators.

Other less controversial bills also passed, several of them tied to enacting the national health care reform law at the state level. AB 43 officially expands eligibility for MediCal to single, childless people whose incomes are under 133 percent of the federal poverty level. California is expected to increase MediCal enrollment by some 3 million people when the key provisions of the federal law are set to take effect on Jan. 1, 2014.

AB 151 makes sure that seniors have access to Medi-Gap policies—which cover high deductibles and copays that many can’t afford—even if they were previously covered by plans that didn’t offer Medi-Gap. Several other bills passed in committee would protect health coverage when life circumstances change—for example, with a divorce or job loss--and would give consumers information about the new health benefits exchange after it is launched in 2014.

A bill to guarantee that new health insurance policies written after January 1, 2012 will provide coverage for maternity services, which not all individual policies currently offer, also came before the health committee Wednesday afternoon.

Anthony Wright, executive director of Health Access, a statewide policy group, said that the raft of health bills, if passed next fall, would do more for consumers than even the national health care act.

“California has the opportunity to not just implement but improve upon the federal law,” Wright said. “We have a couple of bills around enrollment. I’m positively evangelical around bills that would really put us in position to get millions of Californians coverage they need on Jan. 1, 2014.”

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