Assembly Bill 52 is a modest bill that would give teeth to the State Insurance Commissioner’s oversight of health insurance rates in California.
On a day when the SF Chronicle is reporting that Kaiser Permanente, flush with more than $5 billion in profits over the last 27 months, is poised to raise rates on 300,000 California Kaiser policyholders by an average of 11%, Wendell Potter, writing in the Huffington Post, and Lee Fang, writing at Think Progress, are investigating Kaiser’s financials more deeply and shining a light on the “coalition” that big insurers have built to fight AB 52 and kill the rate review bill before it becomes law.
More key graphs on the flip…
Writing in the Huffington Post, author and former health insurance exec, Wendell Potter highlights the background of Kaiser’s opposition to AB 52:
Kaiser alone has spent $700,000 so far this year lobbying lawmakers in Sacramento. It undoubtedly will be spending quite a bit more this summer to persuade state senators to vote against the rate control bill. And if any health plan can pull it off, it’s Kaiser, which has the biggest market share in the state and is also one of the country’s most profitable insurance companies.
According to public filings, Kaiser has made a whopping $5 billion in profits since 2009. That’s more than all but a small handful of the country’s for-profit insurance corporations have made. During the first three months of this year, Kaiser made more than $920 million in profits. Yet because it has been able to maintain its legal structure as a nonprofit, it doesn’t pay taxes on that money like the for-profits do.
One of the ways the company has been able to keep profitability strong is by demanding double-digit rate increases from its customers. Earlier this year, Kaiser announced it would raise rates on many of its policyholders in California by as much as 23 percent. No wonder it doesn’t want the state’s insurance commissioner to have the power to say “no” to such increases.
Potter continues, assessing the outsized compensation packages and ample reserves enjoyed by the executives running Kaiser and Blue Shield, which are ostensibly “not for profit”:
Kaiser’s CEO’s $8 million in compensation puts him in the same league as the CEOs of the biggest for-profits. Blue Shield of California and many of the other nonprofit Blues around the country are also doing quite well, thank you.
As a Consumers Union analysis found last year, seven out of 10 nonprofit Blues plans had at least three times more in reserves than regulators required. To be able to maintain that level of profitability, nonprofit health plans have to hike rates just as high and just as often as their for-profit competitors.
And healthcare insurers, using those profits, have assembled a powerful “coalition” in an attempt to defeat AB 52, a bill that will regulate those rate hikes. Lee Fang, writing in Think Progress, breaks it down:
Like the national legislative battle over President Obama’s health reforms, insurance companies in California are attempting to undermine AB 52 by showcasing widespread opposition to the bill. The California Association of Health Plans – the trade association representing major insurers in the state like Kaiser Health Plans, Anthem Blue Cross (WellPoint), Aetna, UnitedHealth, HealthNet, and Cigna – is leading the charge, firing off press release after press release noting the “diverse group” of California organizations against the rate review bill. However, a closer look at the groups the insurers are touting reveals multiple financial ties to insurers opposed to AB 52.
Fang continues:
ThinkProgress has learned that the lobbying firm Fiona Hutton and Associates has been charged with helping to recruit and push these insurer allies…Health insurers have not only purchased lobbyists with their customers’ premium money, they have purchased friends to build their anti-AB 51 “coalition.”
You can take action to create grassroots pressure for the passage of AB 52. The Courage Campaign is running a petition calling for Kaiser Permanente to switch course and support the passage of AB 52.
You can SIGN THE PETITION here.
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NUHW, California’s fastest-growing union, is a worker-led movement to hold healthcare corporations accountable to the public interest, improve the lives of caregivers and patients, and win quality, affordable healthcare for all. Join us on FACEBOOK and follow us on Twitter. You can read about NUHW workers’ fight to win a fair contract at Kaiser at KaiserUnited.org.