Yesterday I received a call from Assemblyman Feuer asking that Small Business California support his bill AB 52.
AB 52 would require health plans and insurers obtain approval from state regulators before changing health insurance rates. Under this bill, the Department of Managed Care[DMHC] and the California Department of Insurance[CDI] would have regulatory authority to approve, deny or modify rate changes.
It requires plans and insurers to submit to the departments explanatory information and allows the departments to hold public hearing on these rate changes. It also would prohibit insurers from proposing rate changes on each product more than once a year.
Currently the DMHC and CDI have authority to review whether or not proposed rate increases are excessive, unjustified or unfairly discriminatory, but neither department has the authority to reject such an increase.
The argument for this bill according to the author is that from 1999 to 2010 health insurance premiums for families rose 131% while the general rate of inflation increased 28% according to the Kaiser Family Foundation.
The same report states that the states with robust and transparent rate review and approval processes have greater power to protect consumers. AB 52 would put California in line with 35 states that require some form of prior health insurance rate approval.
The argument against the proposal is that there is competition in the insurance industry and rising cost have been the result of the increase cost of medical care. It is also argued that the department will be under political pressure to keep rates artificially low.
They cite the example of the previous Insurance Commissioner who twice recommended 0% increase in workers compensation pure loss rates when his own actuaries cited the need for over 15% increases.
Obviously health insurance premiums are a big problem for California small businesses.
What is your position on this bill?
Small Business California
2311 Taraval Street
San Francisco, CA 94116