BILL TO LET STATE LIMIT HEALTH INSURANCE RATE HIKES ADVANCES IN STATE SENATE

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Local legislators split on support, opposition to measure

 


June 25, 2010 (Sacramento) – On Wednesday, the State Senate Health Committee passed AB 2578, the Healthcare Accountability Act. The measure aims to protect California consumers from excessive health insurance rate hikes, such as the 39% rate increase announced by Anthem Blue Cross earlier this year and an up to 75% increase imposed on businesses by Blue Shield.

AB 2578 would allow require health insurance companies and HMOs to get prior approval from state regulators with the Department of Insurance or the Department of Managed Health Care before they could jack up health insurance costs to policy holders on premiums, co-payments or deductibles. Under current law, auto insurers must obtain permission from regulators before raising rates, but there is no such requirement for health insurers or HMOs.
 

Nationally, health insurance rates for individuals have jumped 20%--and that’s according to an insurance-backed study by Kaiser Permanente. In California, the Sacramento Bee reports today, the Department of Insurance found “substantive mathematical errors” in Aetna Health Care’s calculations used to justify its proposed 19% premium rate increase, the second time in two months that the Department has caught this sort of error, adding fuel to the argument that more regulation is needed.
 

AB 2578 is supported by consumer groups including Consumer Federation of California, which calls the bill “a powerful tool to control unabated rate increase from HMOs and health insurers.”

 

It is opposed by the insurance industry and by current Insurance Commissioner Steve Poizner, who critics have contended has an overly cozy relationship with the insurance industry. Poizner pledged not to accept campaign donations from insurers, but in 2005, his campaign accepted $75,000 from a Chamber of Commerce PAC just one day after the Chamber took two insurance contributions totaling the same amount. Since then, consumer rights groups have accused him of favoring insurers he was elected to regulate, the Mercury News has reported. Jones has pledged to accept no donations from insurers; his opponent, Mike Villines, Republican Assembly leader, has taken insurance monies.

 

“We still have a big fight ahead of us,” says Assemblyman Dave Jones, author of the bill and currently a candidate for state Insurance Commissioner, the job held by Poizner. “The health insurance lobbyists will stop at nothing to kill this legislation.” AB 2578 has already passed the full Assembly, where local legislators’ split votes down party lines. Democrats Mary Salas and Lori Saldaña voted for AB 2578. Republicans Joel Anderson, Nathan Fletcher, Martin Garrick, and Kevin Jeffries voted no. Democrat Marty Block was absent for the vote.

 

AB 2578 next goes to the Senate Appropriations Committee, where Jones hopes to win passage and bring the bill before the full Senate. He has established a petition site for supporters  to ask Legislators to support the measure.  You can also contact your State Senators with your opinions, for or against, this measure or any others via the "Sound Off" section in our Citizens Action Center.

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