San Francisco Chronicle Rejects Prop. 45

The San Francisco Chronicle has urged readers to vote no on proposition 45, an attempt to let state regulators have control over insurance prices.

Under current California law, the state insurance commissioner can deem health insurance rate increases to be excessive, but cannot veto the rates. Prop. 45 would change that, giving the commissioner the power to intervene if an increase in rates was judged to be excessive.

In an editorial published Sunday, the Chronicle sided with opponents of Prop. 45, arguing the measure would “seriously undermine” changes to the insurance industry mandated by Obamacare. The paper argues that intervention by the commissioner after rates are set but before the open enrollment period could create chaos:

Unlike auto insurance, health care premiums are set once a year, undertight timelines for the open enrollment period. Last-minute rateinterventions would inject chaos and uncertainty into an alreadyprecarious process of balancing its “triple aims” of cost, quality andhealth outcomes.

The Chronicle also notes that the group pushing Prop. 45, Consumer Watchdog, has made millions off a similar approach to auto insurance in the state. The paper insinuates, ironically, that the profit motive might be motivating the current push for price controls on health plans.

In July, California Insurance Commissioner Dave Jones sought to promote passage of Prop. 45 by highlighting the jump in insurance rates (22% to 88%) in Obamacare’s first year. As the insurance industry pointed out in response, those increases were an intentional part of the design of Obamacare. They are the mechanism to balance out the cost of covering those who are older and less healthy.

Rate increases in California averaged a relatively modest 4.2% this year. That is partly the result of the risk corridor program built into Obamacare’s first 3 years and, perhaps, concern by insurers that larger increases might lead to passage of Prop. 45. Insurers have reportedly put $25 million behind an effort to defeat the measure.