CA Ballot Initiative Gives State Control over Health Insurance Rates
If a ballot proposition passes later this year, the state of California will be in control of setting insurance rate increases.
Proposition 45 has already been placed on the ballot for 2014. It
would allow the state's insurance commissioner to reject rate increases
it deems excessive. Currently the commissioner can deem a rate to be
excessive but does not have the power to prevent a rate increase from
Consumer Watchdog is the group which gathered signatures to put proposition 45 on the ballot. It claims that between
April 2012 and November 2013 premium hikes which were deemed excessive
(but went through anyway) cost nearly a million Californians a total of
more than $250 million.
Covered California has so far been non-committal about the possible impact of proposition 45. Executive Director Peter Lee told the LA Times
his agency was still reviewing it; however, he also suggested it was
possible giving regulators veto power over rates could lead to more
insurers withdrawing from the marketplace.
Leading California insurers have reportedly put
$25 million behind a push to defeat proposition 45. The effort, which
goes under the name Californians Against Higher Health Care Costs, has a
web page arguing against
the measure. Proponents of Prop. 45 see the spending by California's
largest insurers as an example of the kind of non-medical expense which
necessitates sharp rate increases.
California already uses a similar system to control rate increases for auto insurance. Consumer Watchdog's president notes that California is "the only state in the nation to see a decrease in auto insurance prices."