Originally published in the Sacramento Bee on Sunday, January 12, 2014

No political consultant sees more angles than Richie Ross, but his tangent opposing two pro-consumer ballot initiatives, which could turn 2014 into the Year of the Patient, is unsound geometry (“Voters can’t avoid health care politics,” Jan. 2). The ballot measures will save lives and money by closing fatal loopholes in Obamacare and California’s patient-safety laws.

The Affordable Care Act requires everyone to buy insurance but does not limit its cost. The “Justify Rates” ballot initiative before voters in November requires California health insurers to justify rate hikes and get approval before they take effect, as now happens in 35 other states.

The millions of individual policyholders and tens of thousands of businesses whose rates could not go up without state approval under the measure are those who have been hardest hit by premium increases over the past decade.

The ballot measure applies California’s tough property casualty insurance regulation, enacted by voters in 1988 as Proposition 103, to health insurance. A recent study by the Consumer Federation of America found the law has saved California drivers $102 billion. Drivers today pay less in real money than they did in 1988, the only state to see any decline.

The same tough rate regulation already applies to medical-malpractice insurance for physicians and hospitals, including that paid for by private clinics.

Consumer Watchdog has used the law’s protections to lower medical-malpractice insurance premiums by $77 million over the past decade. Ironically, doctors enjoy the protection that millions of Californians who pay for health insurance don’t yet have.

That’s why arguments that the Troy and Alana Pack Patient Safety Act, now circulating, will raise malpractice rates are phony.

This ballot measure will save lives by curbing substance abuse by doctors, stemming the tide of overprescribing, and updating a 38-year-old cap on victims’ recovery that prevents injured patients from getting justice.

The California Medical Board estimates that 18 percent of doctors have a drug or alcohol problem during their careers. Mandatory drug testing, as now applies to most other public safety professions, will prevent dangerous doctors from practicing. Updating our medical-malpractice laws will allow victims of drugged, drunk and dangerous doctors to get justice.

One quarter of all medical discipline in the state involves abuse of drugs or alcohol. The Pack Patient Safety Act will protect the victims of this abuse and their families from the third leading cause of death in America: medical malpractice.

Jamie Court, proponent of the initiative requiring public justification of health insurance rates, is president of Consumer Watchdog. Carmen Balber is the nonprofit group’s executive director.

An analysis just released by California’s health insurance exchange, Covered California, offers the first real insight into the depth of the Obamacare cancellation crisis.

About 450,000 of the 900,000 cancelled California policyholders will see rate hikes, according to the analysis released by Covered California.  That’s 50% of all cancelled Californians who will be paying more.

Most strikingly, half of those cancelled policyholders are getting policies that are little different from the ones cancelled, deemed by Covered California “comparable policies. ”   In other words, half of cancelled California policyholders are paying more, in some cases a lot more, for policies that are worth no more under the Affordable Care Act. Covered California reports the other half – 225,000 — will pay more for better benefits since they had “Thinner Plan.”

Despite the ugly stats, the Covered California’s board of political appointees voted to block President Obama’s call for extending cancellations for another year.  The Covered California contracts with health insurance companies, written at the insurers’ request, required them to cancel the 900,000 Californians. Thursday the board of political appointees refused to reverse course, arguing that would create more problems.

The happier headline Friday that 360,000 Californians have applied for coverage with California Covered is little surprise given that 900,000 policyholders have nowhere else to go because of its actions.   And that was the point of the cancellations – drive the individual policyholders into Covered California’s pool.

The problem is that pool has premiums that are much higher than what they should be and doctor and hospital networks that are much too small.  Cancelled policyholders would care less if they had comparable prices and comparable benefits.  And that’s what reformers should be fixing, rather than defending as reasonable.

35 states have rate regulation but not California. So benefits and premiums will continue to be out of whack until voters set the insurance industry and its political allies straight through a ballot measure next November, which requires approval by the elected insurance commissioner for rate hikes and benefit changes.

The Covered California analysis shows that 35% of cancelled policyholders will get subsidies for policies, so they will get rate relief under the Act. That doesn’t mean taxpayers aren’t paying too much for those policies, only that low income consumers are getting help.

The analysis, by one of the biggest boosters of the ACA, discredits an argument among other boosters that is troubling: why do we care that cancelled policyholders are losing ‘junk insurance.”

Our consumer group supported the ACA, and its research and education inspired its bans on junk insurance, preexisting condition limitations and medical underwriting.  The fact is, however, that cancelled policies in California are, by and large, not junk.   Their physician and hospital networks under old policies are far broader than under the Covered California plans. Of course, no one is watching, since our insurance commissioner has no power over prices.

Rate regulation is one answer, but until the 2014 election, when California voters can make that change, backers of the ACA also have to stop insisting its policies are always better, even if they cost more and cause doctor dislocation. That just won’t fly with a public that knows far better. Californians know when their doctors are not in the networks in the new plans and their premiums are higher.

If we want to save the ACA, then we better make it work. That includes acknowledging its flaws and trying to make them better.

In a state like California, without rate regulation and with much ACA support, it’s unthinkable that Covered California would buck the president and California Insurance Commissioner Dave Jones’ call for a reprieve on cancellations when its own numbers show 450,000 are paying more under the ACA.

It’s the continuation of a troubling logic that you are either for the ACA, and the relief it extends to 48 million uninsured, or against it. That type of reasoning will alienate the middle class, which is largely without subsidies and facing a real crisis in cost in states like California. These policyholders need relief too. And that means bucking the insurance industry, something its business partners at Covered California seem completely unwilling to do.

If the most ardent backers of the ACA don’t start to think like average citizens, there’s little reason to believe the vital center and muddled middle will continue to support the ACA.  It’s time to wake up and smell the rate hikes and insurance company shenanigans for what they are – wrong, plain and simple. Then we can work together on fixing them.

Posted by Jamie Court, author of The Progressive’s Guide to Raising Hell and President of Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

I’m truly humbled.

It was a big deal when, 25 years ago this month, you and other California voters joined with me to pass Proposition 103, the toughest auto insurance regulation in the nation. But I had no idea exactly how big.

Today, in downtown Los Angeles, the Consumer Federation of America released the findings of a new report: Prop 103 has saved California drivers over $100 billion dollars since 1988. That’s about $8,125 per California household. In fact, California is the only state in the country where auto insurance rates actually went down over the last 25 years.

Back in 1984, the California Legislature passed a law requiring drivers to have auto insurance…but didn’t limit how much insurers could charge. Predictably, insurers hiked prices by double digits. Voters revolted against the price gouging by passing Prop 103, and the result was billions in savings.

Now, the federal health reform law is requiring everyone to buy health insurance. But Obamacare doesn’t limit what insurers can charge. It’s déjà vu all over again. Not surprisingly, insurance companies are hiking prices by double digits.

We Californians have been through this before, and with your help we’ll revolt again next year. Consumer Watchdog has put an initiative on the November 2014 ballot that will apply Prop 103’s money saving reforms to health insurance companies. Health insurers will have to open their books and justify any rate increase before it takes effect.

This will be another David v Goliath battle like the one we won together twenty-five years ago.

Auto insurance in California is a $20 billion a year industry. Health insurance is more than a trillion. Imagine the savings we’ll be celebrating 26 years from now once voters regulate the health insurance industry at the ballot next year.

Thanks for all of your support.

Posted by Harvey Rosenfield – Founder of Consumer Watchdog and author of Proposition 103. For more on Consumer Watchdog and Prop 103 visit our website

Anthem Blue Cross could owe big refund checks to 730,000 Californians if its proposed rate hikes of up to 25% are deemed excessive thanks to an initiative voters will consider on the 2014 ballot.

The ballot measure requires health insurance companies to get approval before raising rates and allows that refunds be ordered on rates that are considered excessive after November 6, 2012.  When voters approve the measure, the insurance commissioner will have the power to retroactively order refunds for excessive rates.

Read the initiative here

“Anthem and every health insurance company in California are on notice: Excessive rate hikes they impose today could mean big refund checks for consumers down the road,” said Carmen Balber with Consumer Watchdog.

Anthem has proposed rate hikes averaging 18%, and as high as 25%, for 630,000 individual policyholders.

It has proposed rate hikes averaging 15%, and as high as 25%, for another 100,000 individual policyholders.

The Insurance Rate Public Justification and Accountability Act qualified for the ballot in August, after Consumer Watchdog Campaign and allies submitted petitions containing 800,000 voter signatures.

“Californians can no longer afford the outrageous double-digit rate hikes health insurance companies like Anthem have imposed year after year, and sometimes multiple times a year, ” said Jamie Court, proponent of the ballot measure and president of Consumer Watchdog. “This initiative gives voters the chance to take control of health insurance prices by forcing health insurance companies to publicly open their books and justify rates, under penalty of perjury.”

Senator Dianne Feinstein, the first person to sign the ballot petition, is an honorary co-chair of the ballot initiative campaign, which is also supported by California Insurance Commissioner Dave Jones.

The ballot initiative builds on California’s successful model of rate regulation for auto, home and other property and business insurance. That law, Proposition 103, was enacted by the voters in 1988 and has saved California drivers $62 billion since it was enacted.

The Insurance Rate Public Justification and Accountability Act:

• Requires health insurance companies to publicly disclose and justify, under penalty of perjury, proposed rate changes before they take effect.
• Makes every document filed by an insurance company to justify a rate increase a public record.
• Requires public hearings on proposed rate increases.
• Gives Californians the right to challenge excessive and unfair premium rate increases.
• Prohibits health, auto and home insurers from considering Californians’ credit history or prior insurance coverage when setting premiums or deciding whether to offer coverage.
• Gives the elected insurance commissioner authority to reject unjustified rate increases.

Just when consumers are finally getting a look at how health insurance companies conduct their business, the industry is racing to shut and lock the door. Buried deep in a “model law” for states to update health insurance regulation is a clause that would keep secret the companies’ justification for  exorbitant rate increases.

Why’s this so bad? Because one of the few ways patients and consumer groups can tell whether a rate increase is justified is to closely examine the data-heavy actuarial reports that insurers use as their defense. In states with consumer-friendly insurance commissioners, some have found gross math errors in favor of the companies. (Simple mistakes? Maybe.) Without access to actuarial and other related data, consumers can’t even hold an unfriendly insurance regulator to account, much less force the company to back down.

The “model law” is being drafted by the National Association of Insurance Commissioners, a private body of state insurance commissioners. It has long been criticized for being too cozy with the industry. The NAIC, however, has also drafted a lot of the regulations governing health insurance reform nationally, with the explicit approval of the Department of Health and Human Services. So what the NAIC says and does matters to every insurance policyholder.

Here’s the industry-friendly secrecy clause tucked into the NAIC’s model law, which most states would closely follow in drafting their own laws:

Each health carrier shall file with the commissioner annually on or before March 15, an actuarial certification certifying that the carrier is in compliance with this Act and that the rating methods of the carrier are actuarially sound. The certification shall be in a form and manner, and shall contain such information, as specified by the commissioner. A copy of the certification shall be retained by the carrier at its principal place of business.

(3) (a) A health carrier shall make the information and documentation described in paragraph (1) available to the commissioner upon request.

b) Except in cases of violations of this Act, the information shall be considered proprietary and trade secret information and shall not be subject to disclosure by the commissioner to persons outside of the Department of Insurance except as agreed to by the health carrier or as ordered by a court of competent jurisdiction.

There is a lot of room for mischief in an actuarial certification, especially when the actuarial company depends on the insurance company for its pay. The insurance industry primarily uses the certifications as a shield against state oversight, especially any attempt to lower rates.

Under this clause, a state insurance commissioner could have trouble even telling the public why an insurance rate is unjustified,  turning protective oversight  into a he said-she said catfight. Given tens of millions in lobbying money employed on the insurance industry side, it wouldn’t be an even battle Consumers couldn’t fight back against rates without data to back their argument.

If the secrecy clause stays in, states that already make such data public. like California, will find their legislatures swarming with insurance lobbyists pushing to put the data back in a closet, because the NAIC model law says to do it. The insurance lobby has repeatedly blocked state authority to deny or modify rate increases, so for a $35-million annual lobby, a little secrecy looks easy.

There is almost no such thing as a “trade secret” in a service industry like insurance. The companies don’t need to keep their actuarial reports secret from other insurers–they just need to keep the data away from outraged consumers.

The NAIC’s own consumer representatives oppose the industry secrecy clause. We hope the Department of Health and Human Services, which has strongly favored disclosure and transparency, will also weigh in. Otherwise, it will be up to the states to understand that this clause is a model of nothing except the lobbying might of the health insurance industry.

Consumers who’d like to fight back, at least in California, can start by learning more about the Consumer Watchdog Campaign’s November ballot initiative. It would make insurance companies justify their rates before they go into effect, and reduce or retract rates if they’re unjustified.

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Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

Thursday’s reports that some Californians will get rebates on their health insurance premiums are a little bit of good news–but not nearly as good as it could be.

An L.A. Times story reports that California small businesses and their employees who are insured by United Health Group will get rebates averaging $98 on last year’s premiums because United Health didn’t spend at least 80% of the premiums on health care, a requirement under the federal health reform. The total will come to about $3.5 million in the state. Other insurers may also owe money on small business, large employer and individual policies–the figures are still being crunched.

But what if insurance companies could not overcharge us in the first place? The 80% rule in the federal law only encourages insurance companies to pay hospitals and doctors inflated prices, because it inflates the 20% that insurance companies get to keep. (It’s like the Hollywood agent who gets a 15% cut–his personal incentive is to get the biggest price for his client.) With no real curbs in California on how much insurance companies can charge, they have no incentive to bargain for lower medical costs to begin with.

Unlike 35 other states, California has no power to make health insurance companies justify their rates and to deny or modify unreasonable or unjustified rates before they go into effect. Californians also have no right to make the state do its job through consumer challenges to unjustified rates. All this would change if voters pass an initiative, sponsored by the Consumer Watchdog Campaign, that’s headed for the November ballot.

Which brings us to another huge source of savings–the inflated rates that insurance companies encourage hospitals and in some cases doctors to charge. A shocking recent story, also in the L.A. Times, found that patients who are insured are often paying out of pocket many times the amount of patients who pay cash for the same treatment.

Here, from the story, is how it works:

Many hospitals, doctors offer cash discount for medical bills

The lowest price is usually available only if patients don’t use their health insurance. In one case, blood tests that cost an insured patient $415 would have been $95 in cash.

May 27, 2012|By Chad Terhune

A Long Beach hospital charged Jo Ann Snyder $6,707 for a CT scan of her abdomen and pelvis after colon surgery. But because she had health insurance with Blue Shield of California, her share was much less: $2,336.

Then Snyder tripped across one of the little-known secrets of healthcare: If she hadn’t used her insurance, her bill would have been even lower, just $1,054.

“I couldn’t believe it,” said Snyder, a 57-year-old hair salon manager. “I was really upset that I got charged so much and Blue Shield allowed that. You expect them to work harder for you and negotiate a better deal.”Unknown to most consumers, many hospitals and physicians offer steep discounts for cash-paying patients regardless of income. But there’s a catch: Typically you can get the lowest price only if you don’t use your health insurance.

That disparity in pricing is coming under fire from people like Snyder, who say it’s unfair for patients who pay hefty insurance premiums and deductibles to be penalized with higher rates for treatment.

The difference in price can be stunning. Los Alamitos Medical Center, for instance, lists a CT scan of the abdomen on a state website for $4,423. Blue Shield says its negotiated rate at the hospital is about $2,400.

When The Times called for a cash price, the hospital said it was $250.

Is your blood boiling yet? Insured patients can try to pay the cash price, but elsewhere in the story we find that hospitals may not even allow patients with insurance to get the cash price. And if you pay cash, it doesn’t count against your deductible or the out-of-pocket limit for your policy. Is this cozy or what for the (usually for-profit) insurance companies and (often for-profit) hospitals?

If California had the power to approve, deny or modify unjustified health insurance rates before they went into effect, the insurance companies would have to do more than prove they’re spending 80% of your premium on whatever they can define as “health care.” With their books open and both consumers and regulators looking on, they’d have powerful incentives to push harder to bring down costs, just as auto insurance companies do—in large part because regulators are watching. Executive compensation in the millions would no longer come out of patients’ pockets.

That form of regulation, called “prior approval” of rates, is the aim of the ballot initiative sponsored by the Consumer Watchdog Campaign. The same kind of regulation, passed by voters as Proposition 103 in 1988, already saves hundreds of millions of dollars a year on average for auto and homeowner insurance buyers in the state. In just the first nine years after voters passed Prop 103 in 1988, property and casualty insurance companies had to fork over more than $1 billion in consumer rebates–similar in type to the $3.5 million United Health is paying.

It’s no surprise that the health industry is one of the state’s most powerful political lobbies. It’s no surprise that such lobbying power has killed every effort to pass effective control of health insurance rates in the Legislature. It’s also no surprise that stories like the one above are making voters furious. At least voters, unlike too many politicians, don’t have to do what the health insurance industry tells them to do.

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Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

Next week we will be turning in the signatures for our ballot petition to force health insurance companies to justify their rates and get permission before instituting their rate hikes.

Download, sign and return in the mail by the end of the weekend to be part of the signature turn-in or forever hold your peace.

This short video preview of the initiative by our friends in Hollywood explains why this is the most important autograph you will give this year.