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Calif. bill targets excess health insurance rates
Question of the Day
SACRAMENTO, CALIF. (AP) - A bill that would allow state officials to reject rate increases proposed by health insurers is under intense lobbying pressure as it faces a key committee vote this week.
Groups representing insurers, doctors and hospitals are trying to have the California bill weakened or killed, although for different reasons.
The outcome of the debate has national significance. The sheer scale in the California insurance market, along with the state’s political landscape and national influence, make it a battleground state for such regulations.
California, home to one of every eight Americans, represents 11 percent of the national market for those with health insurance through an employer and 15 percent for those with individual health coverage, according to the Kaiser Family Foundation.
The bill, AB52, is scheduled for a vote Wednesday, but legislative staff worked through the holiday weekend on proposed amendments to alter parts of the bill that have drawn some of the heaviest fire from opponents.
If approved and signed into law, the legislation would allow the state insurance commissioner or the Department of Managed Health Care to reject rate increases deemed excessive. The commissioner already can reject rate hikes for other types of insurance, and 34 other states and the District of Columbia provide regulatory oversight over health rates.
Supporters say the bill would protect Californians against excessive rate hikes by profit-oriented insurance companies.
But critics say the California proposal is far more wide-reaching than those in most other states and could create a bureaucracy that adds costs but does nothing to address the rising medical costs that drive up insurance rates. They warn that insurers forced to squeeze out costs will reduce payments to doctors, which in turn could force doctors to reduce care for low-income patients.
“AB52 is a misguided bill that will have the effect of limiting patients’ access to care,” said Patrick Johnston, president of the California Association of Health Plans.
Health and insurance industry representatives also see political hazard in a bill that puts regulatory veto power in the hands of the insurance commissioner _ an elected office in a state that tends to fill those offices with ambitious Democratic politicians.
The insurers are major political players in California, supporting both political parties and key members of legislative health committees with campaign contributions.
State finance records showed Aetna, Anthem Blue Cross, Blue Shield of California and UnitedHealthcare made a total of $3.4 million in campaign contributions during the 2009-2010 election cycle, including tens of thousands to members of the Senate Health Committee. Two insurance company-backed political action committees accounted for more than $550,000 in additional political backing.
Insurance Commissioner Dave Jones, a former state lawmaker, and other commissioners have won concessions and smaller health rate hikes by using the office as a bully pulpit against insurers. On Tuesday, he emailed an appeal for support, noting the heavy lobbying against the bill and asking supporters to call fellow Democrats who sit on the Senate Health Committee.
“Ask them to reject `poison pill’ amendments that would undermine our efforts to pass a strong bill,” Jones wrote.
The amendments being discussed would weaken the direct regulatory oversight for rate increases and instead hand the decision to a panel of experts if regulators and insurers cannot agree by a deadline, according to a legislative staff member who is familiar with the negotiations over the bill but is not authorized to speak publicly. The proposed amendments also would limit the types of coverage subject to review and require more information about what’s driving cost increases, the staff member said.
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