Commentary
Right now in California, health insurance companies have a green light to raise health insurance premiums as much and as often as they want, and state regulators are powerless to stop them.
In passing Assembly Bill 52 on Thursday, California's Assembly took a substantial step forward to protect consumers from egregious health insurance rate hikes.
AB 52, authored by Assemblymembers Mike Feuer, D-Los Angeles, and Jared Huffman, D-San Rafael, requires health plans and insurers in California to seek approval from regulators before raising health care premiums, co-payments or deductibles.
Skyrocketing health insurance premiums mean that individuals and families are paying more and more each month for health care. Since 1999, average health insurance premiums for family policies have risen 138 percent, while medical inflation rose just 31 percent, putting insurance out of reach for millions of Californians.
This health insurance gap increases the burden on taxpayers, drags down the economy and, most significantly, threatens families' quality of life.
It's time to put a stop to this.
The federal health care reform law took critical first steps to control health insurance premium increases, but it does not grant explicit authority to regulators to block or modify egregious rate increases.
This is a loophole we must close.
Today, in at least 17 states, including California, state regulators and insurance commissioners lack the authority to block or modify insurance rates that are deemed excessive, unjustified or discriminatory.
California officials have rejected excessive rates for auto, property and casualty insurance, which has saved consumers billions of dollars in excessive premiums since 1988. But when health insurance premiums skyrocket – some cumulative rates recently escalated 30, 40 even 80 percent – state regulators have no recourse.
It won't surprise you to learn that since California's AB 52 was introduced, insurance companies and their allies have marshaled their resources to oppose the bill.
Health insurance companies don't want any oversight. Why would they? In recent years, they have reported some of their highest profits. The biggest companies recorded a profit of $3.9 billion in the first quarter of 2011 – an average 16 percent increase from a year earlier. At the same time these companies are raising rates and enjoying record-breaking profits, working families are struggling to make ends meet.
Recent premium increase announcements by insurance companies in California have ignited an outcry. State authorities, including Insurance Commissioner Dave Jones, have stepped in to ask insurance companies to postpone and reduce increases, and some companies have complied.
Most recently, Anthem Blue Cross agreed to scale back increases for some policyholders but not others. On May 1, more than 120,000 Californians saw their rates go up an average of 16 percent. And there was nothing state regulators could do about it.
This highlights how California consumers and employers remain at the whim of massive, for-profit insurance companies.
I have reintroduced the Health Insurance Rate Review Act of 2011 to close this loophole at the federal level. It grants the secretary of Health and Human Services the authority to block or modify health insurance premium increases that are unjustified.
The lobby against this bill is strong, but I will continue to push for legislation granting insurance rate regulation authority at both the state and federal level because California families deserve protection from unfair increases in their health insurance.
State regulators need the same authority to regulate health insurance rates as they have for auto insurance. I urge you to let your state senators know the benefits of Assembly Bill 52, and I encourage senators to support it when it comes before the California Senate.