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Lawmakers push plan to control health insurance costs
Published: Sunday, April 10, 2011 at 4:29 p.m.
Last Modified: Sunday, April 10, 2011 at 4:29 p.m.
For the fourth time in as many years, California Democratic lawmakers are pushing a plan to control health insurance rate increases.
A bill jointly authored by Assemblyman Jared Huffman and Assemblyman Mike Feuer, D-Los Angeles, would give state regulators the authority to reject steep rate hikes, like the 16.4 percent premium increase proposed this year by Anthem Blue Cross but later reduced and postponed.
Between now and 2014, when game-changing aspects of the health care overhaul take effect, more rate hikes are likely, Huffman said.
“I think there's every reason to believe they are going to gouge California policyholders if we let them,” he said. The bill, AB 52, is “a no-brainer for everyone but insurance companies.”
Sen. Dianne Feinstein and Insurance Commissioner Dave Jones are backing the bill, which is similar to measures that failed in Sacramento in 2008, 2009 and 2010 under pressure from insurance companies.
“They fought it year after year because they are making out like bandits and everybody else is hurting,” said State Sen. Mark Leno, D-San Francisco, whose district includes southern Sonoma County.
California health insurance premiums have increased 134 percent since 2002, more than five times the overall inflation rate, according to a California HealthCare Foundation report in December.
But the proposed law is unnecessary, said Patrick Johnston, CEO of the California Association of Health Plans, an industry group that represents Anthem Blue Cross, Blue Shield, Health Net and Kaiser among other insurers.
Current state law, authored by Leno, requires insurance rate hikes to be analyzed by an independent actuary, and the health care overhaul approved by Congress last year stipulates that at last 80 percent of premiums must be spent on patient care, Johnston said.
David Hodges, a Santa Rosa insurance broker, said the Huffman bill was “entirely overkill.”
Kaiser Permanente, which insures 140,000 Sonoma County residents, spends 92 cents of every premium dollar on health care, Hodges said.
The real “cost drivers” in health care, Johnston said, are hospital and physician charges, drug and medical equipment costs and low reimbursement rates by the government-run Medicare and Medi-Cal insurance programs.
But insurance industry critics note that the nation's five largest health insurance companies — UnitedHealth Group Inc., WellPoint Inc., Aetna Inc., Cigna Corp. and Humana Inc. — posted profits of $11.7 billion last year, up 51 percent from 2008, according to Health Care for America Now, a coalition of advocacy, health care and labor groups.
“Their margins are off the charts,” Huffman said. “That tells you this is not about cost.”
Without a bill like AB 52, Huffman and Leno said, California has no power to reject an excessive insurance rate increase.
The state already has that authority over home and auto insurance, and 35 other states require some form of prior approval of health insurance premiums, Huffman said.
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