Senate Panel Approves Health Insurance Rate Regulation Bill

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On Wednesday, California's Senate Committee on Health approved a bill (AB 52), by Assembly member Mike Feuer (D-Los Angeles), that would authorize state regulators to reject health insurance rate hikes, the Sacramento Bee reports.

The committee passed the measure with a 5-3 vote along party lines, with Democrats in support (Smith, Sacramento Bee, 7/7). Sen. Michael Rubio (D-East Bakersfield) abstained from voting (Leu, "Health Access Blog," Health Access, 7/6).

Committee Chair Ed Hernandez (D-West Covina) voted in favor of the measure, but called for several changes to the bill. Hernandez said he might vote against the bill on the Senate floor unless certain amendments are incorporated.

Bill Details

Existing state law allows the Department of Insurance to review rate increases proposed by health insurers. However, state law does not authorize regulators to reject rate hikes deemed excessive (Herdt, Ventura County Star, 7/6).

AB 52 would require insurers to receive approval from regulators before raising rates. If officials at DOI or the Department of Managed Health Care find a rate hike proposal to be "excessive, inadequate or unfairly discriminatory," they could reject the proposed increase.

According to an analysis by the Assembly Appropriations Committee, implementing the provisions of AB 52 would cost an estimated $30 million annually.

Support for the Bill

Supporters of AB 52 cite recent increases in health insurance rates and insurers' high profits as reasons why the state needs greater power to regulate premiums.

According to Feuer, recent premium increases have outpaced the rise in health care costs (Buchanan, San Francisco Chronicle, 7/7).

Opposition to the Bill

The California Association of Health Plans opposes AB 52, saying it would not address the underlying factors that have fueled health care cost increases in recent years.

The health insurance industry also contends that premiums in California are on par with national averages, even though California is a high-cost state (Ventura County Star, 7/6).

Next Up

AB 52 now moves to the Senate Appropriations Committee (San Francisco Chronicle, 7/7).

For additional coverage of the bill's passage, see today's Capitol Desk post.

Broadcast Coverage

On Thursday, Capital Public Radio's "KXJZ News" reported on the Senate Health Committee's approval of AB 52 (Bartolone, "KXJZ News," Capital Public Radio, 7/7).

Tim Colling
So, taking over healthcare, obliterating the value of the private capital and risk that has been invested over the years by professionals and companies, is justifiable because there is a "right" or "entitlement" to healthcare. Is that communism or is it socialism... I forget which one this attitude belongs in.
Tim Colling
This bill is just one more step down the slippery slope towards a state-controlled, single-payer health care system takeover. Why should the government be able to tell private businesses how much they can charge for their goods and services?
Frank Apgar
I haven't had a chance to hear the testimony regarding this bill or detailed discussions surrounding this bill. One of the factors that effects the cost of health care coverage is the underlying health and utilization of services of the population covered. If healthy people drop their coverage this will leave less healthy, more expensive people in the pool of covered individuals. This could account for premiums rising faster than the underlying calculated "rise in health care costs". This of course becomes an actuarial exercise calculating the underlying underwriting characteristics of the insured population.

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