Saturday, September 30, 2023
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California Voters Have Their Say on Health Insurance Rates Today

(CN) - Proposition 45, which would give California's insurance commissioner authority to modify or deny insurance rate hikes for millions of consumers, is losing support in the polls, but Insurance Commissioner Dave Jones is confident that voters will approve it today.

"I believe that the voters will be able to see past the lies being spread by the insurance companies about the measure," Jones said in a telephone interview with Courthouse News. "Voters need to know that the misleading advertisements are coming from the big health insurers that oppose the initiative."

The state's top insurance companies - including Kaiser Permanente, Blue Shield of California, Healthnet and WellPoint, the parent company of Anthem Blue Cross - have spent $57 million on advertisements opposing Prop. 45.

Jones said the insurance companies are determined to kill the measure for one reason: "To protect their profits."

Consumers are required by law to buy health insurance, but no one can stop the insurance companies from charging excessive rates, he said.

Prop. 45, the Public Notice Required for Insurance Company Rates Initiative, requires the California Insurance Commissioner to approve any changes to health insurance rates before they can take effect. It also requires public notice, disclosure and hearing on health insurance rate changes, and subsequent judicial review.

Prop. 45 applies only to health insurance sold to individuals and small businesses, not to large employers. The measure would affect approximately 6 million individuals and small businesses. It would be retroactive to 2012, so insurers could be required to pay refunds on premiums they have been collecting for two years.

"This type of regulation is not something new in California," Jones said. "The Department of Insurance has 25 years experience regulating insurance products."

The initiative expands the language of Prop. 103 - passed by California voters in 1988 - which gave the commissioner the power to regulate premiums for home and auto insurance.

The commissioner today has no power over the rates set by health insurance companies. Although the Department of Insurance and Department of Managed Care review the rates, "no agency currently has the ability to reject excessive health insurance rate hikes," said Jones, who is seeking re-election today.

This gives insurance companies free rein to continue to increase their rates to the detriment of consumers, he said, pointing out that premiums for employer health insurance in California have increased by 185 percent since 2002.

Anthem Blue Cross recently implemented its fourth consecutive excessive rate increase on small employers, Jones said.

The Department of Insurance found that Anthem's proposed average 9.8 percent premium increase on 120,000 members in small group health insurance policies to be excessive and unreasonable. The department determined that a 2.1 percent increase would be more appropriate, but had no ability to enforce its suggestion.

"California has no power to reject these excessive health insurance rates, unlike the 35 other states in the country that have this authority," Jones said.

On the other end of the spectrum, opponents of Prop. 45 say that the initiative will give one politician too much power, interfere with consumer treatment options, and create more costly bureaucracy.

"Prop. 45 is a flawed, deceptive measure that will increase costs for consumers and harm the quality of our health care," according to Californians Against Higher Health Care Costs, a coalition of doctors, hospitals, small businesses, taxpayers and health plans.


The coalition says that the insurance commissioner will have "sweeping new power over rates, co-pays and benefits for millions of business employees and could force many small businesses to lay off workers, drop coverage, or even go out of business."

The initiative will cost tens of millions of dollars for bureaucracy without actually doing anything to control the costs that are driving health care premiums, and create confusion and overlap with other state and federal laws and regulations, the opponents claim.

Opponents say they are particularly concerned with the measure's potentially harmful effects on Covered California, the insurance exchange created by the state to implement the 2010 Affordable Care Act.

The ballot measure "would conflict with the newly reformed marketplace and the consumer empowerment implemented through Covered California" by undercutting Covered California's authority, taking a different regulatory approach toward premium review and disrupting its deadlines for offering plans to consumers, according to a report by Dr. Jon Kingsdale with Wakely Consulting Group, which was commissioned by the opposition to Prop. 45.

"The result for consumers would be to slow or block the development and offering of new benefits, the entry of new competitors and additional choices for consumers, and even the calculation of premium subsidies for the uninsured of low and moderate incomes. By introducing uncertainty into buying individual and small-group coverage, the Initiative would undermine the transparency at the heart of Covered California," the report states.

Covered California's own analysis of the proposition and its broad definitions of rates found that it could have a significant detriment on the exchange's operations. One risk is the possibility that health plans will withdraw before or during the rate regulation process, according to the analysis, written by executive director Peter Lee in August.

Covered California's consumers could see a reduction or rise in their rates as a result of the measure, which could disrupt Covered California's marketing and operations, though not any differently from what happens when plans bid rates that change their price position relative to other plans in a given region, Lee wrote.

The scope and nature of the impacts on Covered California's operations are subject to the interpretation and implementation of the Act by the Commissioner and potentially the courts, Lee said.

In the end, the Covered California board decided to steer clear of politics and remained neutral on Prop. 45.

Another problem with the measure, opponents say, is that it includes a provision that would allow consumer groups and other interveners to file lawsuits over rates even after they have been approved by the commissioner.

Californians Against Higher Health Costs calls Consumer Watchdog, one of the major supporters of Prop. 45, a front group for trial lawyers, and claims that the measure is not really about regulating health care, but about lining the sponsors' pockets through lawsuits.

"Proposition 45's sponsors are lawyers who made over $14 million off costly legal 'intervener' challenges allowed by the last measure they sponsored (Proposition 103). Now, they've hidden the same provision in this measure," the coalition claims.

Attorneys stand to make tens of millions of dollars from health-care lawsuits if Prop. 45 passes, the coalition claims, and says those costs will be passed on to health care consumers.

On opposing sides of the debate over the measure are two nurses associations, with the American Nurses Association of California saying that the measure will threaten nurses' ability to provide needed patient care by giving a single politician too much power.

"The important decisions about benefits and treatment options should be made by health care professionals and patients - not someone with a political agenda. ANA California urges nurses and all voters to oppose Prop 45," executive director Tricia Hunter said in a statement.

The California Nurses Association, the largest nurses organization in the state, supports Prop. 45.

The association says that the campaign against the measure includes the "misleading use of a miniscule group of nurses with close ties to the hospital industry and other health industry sources to create the false impression that nurses actually oppose cracking down on insurance industry pricing abuses."

The expensive campaign against Prop. 45 could account for the dramatic decline of voter support. The latest Field Poll shows that only 30 percent of likely voters are in favor of Prop. 45, while 42 percent are opposed and 28 percent remain undecided.

A Field Poll in early July showed that 69 percent of voters favored the measure.

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