Tag Archives: affordable care act

Health Care

Lessons From The Cancellation Crisis

Jamie CourtAn 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.

Cancelled Plans

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.

Uncategorized

Medical Interpreter Bill Could Save Lives Lost in Translation

By Gary Cohn

Maria Guevara had been trying to get pregnant for three years when she saw a doctor at Los Angeles County General hospital in 2008. She was understandably thrilled, then, to learn she was indeed three months pregnant at the time of her visit. As Guevara later recalled, when the doctor asked her in English if she wanted to keep the baby, “without hesitation I replied ‘yes’ to his question. Before leaving the hospital, the doctor prescribed me medication that I thought was prenatal care. That lack of communication between the doctor and me has changed my life forever.”

Guevara took the prescribed medication, and experienced violent pain and bleeding. She returned to the hospital, where another doctor told her the bleeding was the result of a miscarriage.

“My baby was dead. The medication the initial doctor prescribed to me was not prenatal care but medication to induce an abortion,” she told a press conference in April at the University of California Davis Medical Center in Sacramento. “Not speaking any English, I was unable to understand his question to me. He did not speak Spanish and no interpreter was provided.”

This occurred at the largest single health care provider for a county where 37 percent of the population is comprised of Spanish-speakers.

“Losing my baby forced me into a deep depression,” Guevara said. “I could not bear looking at or holding babies because the thought brought back painful emotions.”

Although California has some of the strongest laws in the nation spelling out a patient’s right to an interpreter, stories like Guevara’s are far from unique. Day after day, non-English speaking patients are seeing doctors and nurses throughout California without the aid of medical interpreters, sometimes with tragic results, a Frying Pan News investigation has found.

Hardly a day goes by when Julio Perez doesn’t think about his joyful little brother Aldo, an energetic five-year-old who loved watching cartoons – and how Aldo might be alive today if his parents had been able to communicate with doctors.

Both brothers got sick one day in March 2008, and their mother first took them to a clinic with a Spanish-speaking doctor in South Gate, about seven miles southeast of downtown Los Angeles. Each of the boys was given a shot. Julio got better; Aldo did not. Their mother took Aldo back to the clinic, then to two hospitals. At the second hospital, Long Beach Memorial Medical Center, which had more sophisticated medical care available, an interpreter was summoned to explain the liability forms. Once the forms were signed, Julio recalls, the interpreter left and never returned.

None of the doctors or nurses the family dealt with at LBMMC spoke fluent Spanish.

“I had to be the interpreter,” Julio says. As he remembers, doctors said that his brother had a serious bacterial infection. Numerous medical procedures followed, as doctors tried to save Aldo’s life. He died on April 14, 2008.

“I feel that my baby brother’s death was an injustice,” says Julio Perez, now 24. He believes the hospital kept his family in the dark about Aldo’s condition. “If we had proper interpreting services . . . my parents could have asked questions.”

California Assemblyman Dr. Richard Pan (D-Sacramento), a pediatrician and chairman of the Assembly’s Health Committee, says that Maria Guevara’s story, which he heard firsthand in April, epitomizes the need for an effective statewide system of medical interpreters. “That story tells you the horrendous consequences of not being able to communicate between a patient and a health care provider,” he says in an interview.

Such problems are systemic and widespread. In a month-long investigation, Frying Pan News has reviewed 75 case studies from across California in which a qualified medical interpreter was not present. In all of the cases, the health professionals were fluent only in English; the patients spoke a variety of languages, including Spanish, Russian, Mandarin, Cantonese, Samoan, Vietnamese, Khmer and Hmong.

California is the most ethnically diverse state in the nation, and an estimated 40 percent of the population speaks a language other than English at home. The need for qualified medical interpreters, moreover, is expected to increase when millions of people who don’t speak English become eligible for health insurance under the Affordable Care Act. Experts stress that many of those newly enrolled won’t be able to communicate with their doctors and other health professionals unless interpreters are readily available.

“The Affordable Care Act will exacerbate this issue,” says Dr. George Flores, program manager for prevention at the California Endowment, a Los Angeles-based private statewide health foundation that works to expand quality health care for underserved individuals and communities in California. “A good portion of those eligible speak a language other than English. This will put more pressure on a system already bereft of language capability.”

State Assemblyman Philip Y. Ting (D-San Francisco), who held a forum on language access last week, agrees.

“This issue will become even more critical in the coming years,” says Ting, “as three million new patients who speak only limited English enter the health system .”

To address the problem, Assembly Speaker John A. Perez (D-Los Angeles) has authored a bill, AB 1263, that would significantly expand trained medical interpreters. The measure was passed by the Assembly in May and is expected to be voted on by the state Senate soon. If it passes the Senate, it would likely land on Governor Jerry Brown’s desk in September.

The bill would require the state Department of Health Care Services to seek federal matching funds to create a state-certified interpreter system. Under the bill, California would spend $200,000 to gain access to $270 million in federal funds authorized under the Affordable Care Act to fund interpreter services. It would create about 7,000 interpreter jobs over a 10-year period.

“For a relatively small investment of state dollars, we will be able to tap into federal dollars,” says Dr. Pan. “AB 1263 will ensure that all Californians are able to obtain quality care by ensuring good communication between patients and their health care professionals.”

Opposition to the bill is coming from the Virginia-based National Right to Work Committee, according to a legislative fact sheet distributed by Speaker Perez’s office. The National Right to Work Committee, a conservative nonprofit that fights trade unionism, did not respond to queries for this article.

In the absence of available interpreters, many people now use their children, other family members or friends to interpret for them. But physicians, government officials and other experts say this is almost always a bad idea.

“Children do not have the maturity to understand the importance and seriousness of medical discussions,” says Dr. Flores of the California Endowment. “There could be misunderstandings that could lead to very serious problems. Imagine a boy interpreting for a mother having menstrual problems. Parents might withhold information and think they were protecting the child, but this would hurt the medical encounter. It’s never appropriate to depend on a child to interpret.”

When things go wrong, the child interpreters are often left with lifelong scars. Poulinna Po was 15 when she was often pressed into service as an interpreter for her Cambodian father, who spoke Khmer. The elder Po had diabetes and could not understand how to take his medicine. He was reluctant to see doctors or go to the hospital because he felt there was no one who could help him. Poulinna Po could understand what the doctor was saying, but she did not know words in her native tongue to convey the medical information back to her father.

Po’s father ultimately died from a brain tumor and complications from a stroke. Now 17, Poulinna Po blames herself for her father’s death. She tearfully told her story last June at a town hall meeting on language access held at the University of Southern California.

As the Affordable Care Act’s full implementation proceeds, the need for medical interpreters will increase – and so will problems unless the system is fixed. Julio Perez now lives in Norwalk and graduated this spring from California State University, Fullerton with a degree in political science and Chicano Studies. He says he is speaking out to shine a spotlight on the problems caused by the lack of medical interpreters and the need for a solution. He has also testified before the state Assembly Health Committee.

“I’m putting so much effort into this because my little brother passed away and I do not want his suffering to be in vain,” Perez says. “I want people to see that the lack of medical interpreters has had detrimental effects on families and that innocent lives have been lost as well. If the governor signs AB1263, then I will feel that I accomplished what I was hoping for, and saved some lives in the process.”

(Gary Cohn writes for Frying Pan News.)

Health Care

Health Law Doesn’t Protect Californians From Rate Increases

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Reporters largely missed the point of a Commonwealth Fund study released this week, that looked at consumer savings under Obamacare’s 80-20 rule, the rule making insurance companies spend at least 80% of your premiums on health care, not overhead.

The authors started with a fact we already knew — that health insurance companies had to pay $1.1 billion in rebates for missing the MLR requirement in 2011 — and that big shiny number distracted the news media. But the authors zeroed in on a much more important fact. Insurance companies successfully reduced administrative costs by $1.184 billion in 2011, but they used those savings to increase profits instead of passing them on to consumers.

Clearly the 80-20 rule isn’t working to contain profits and hold down premiums, especially in states that don’t have tough regulation of insurance premiums.

California Insurance Commissioner Dave Jones launched an audit this week of the state’s largest health insurers to determine if consumers paid too much when insurers were actually saving money and boosting profits. The Commonwealth study found that in California, insurance companies increased profits for individual plans by $88 per member or about $90 million, even though administrative costs went down and every major insurance company imposed rate increases.

These results are more evidence that states need the ability to say no to rate manipulation. Otherwise, insurance companies will keep premiums artificially high to make sure profit numbers stay high too. As we warned HHS Secretary Sebelius more than two years ago:

“In the same way that a Hollywood agent who gets a 20 percent cut of an actor’s salary has an incentive to seek the highest salary, insurers will have incentive to increase health care costs and raise premiums so that their 15 percent or 20 percent cut is a larger dollar amount.”

As Jones said when announcing the audit:

“I have long pushed for the authority to reject excessive health insurance rate increases and this study provides further evidence of why this change in the law is long overdue in California. Health insurers and HMOs continue to impose double-digit premium increases each year and are making larger profits when selling to individuals and families even during these tough economic times.”

Californians will finally have the chance to stop them, by voting at the next ballot on an initiative measure to require health insurance companies to publicly justify rate increases and get approval before they take effect. Learn more at justifyrates.org

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Posted by Carmen Balber, Washington DC Director for Consumer Watchdog and Consumer Watchdog Campaign

Health Care

Independence Day Reprieve for Consumers Enrolled in Blue Shield Policies To Be Closed This Week

Insurance

Commissioner Dave Jones Sides With Consumers, Echoes Concerns Raised by Consumer Watchdog in Lawsuit Over the So-Called “Death Spiral”

Santa Monica, CA – Consumer Watchdog praised Insurance Commissioner Dave Jones’ announcement today opposing Blue Shield’s plan to close 23 health insurance policies, and echoing concerns raised by Consumer Watchdog in a recently-filed class action lawsuit.

Consumer Watchdog said, however, that as many as 100,000 Californians are still trapped in closed or lower-benefit health plans following policy closures carried out by Blue Shield’s affiliate regulated by the Department of Managed Health Care in 2010.

“Blue Shield is on notice that the company’s plan to close health insurance policies fails to protect consumers as the law requires,” said Jerry Flanagan, staff attorney for Consumer Watchdog. “If Blue Shield decides to go forward with the policy closures, we look forward to working with the company to implement a consumer-friendly plan. We also hope that Blue Shield will ensure that consumers affected by the 2010 policy closures will finally benefit from the protections mandated by law.”

The lawsuit filed by Consumer Watchdog and Whatley Kallas, LLC alleges that Blue Shield is illegally gaming the health insurance system by alternately closing older policies and opening new ones in order to push older, sicker consumers who are more expensive to insure into lower benefit, higher deductible coverage that requires consumers to pay more out of pocket.

The lawsuit seeks to stop Blue Shield from shoving its policyholders into what is known as a “Death Spiral”-the industry term for what happens when a health insurer “closes” certain insurance policies to new customers, and later raises rates to those remaining in the closed policy until those enrollees can no longer afford coverage. Since consumers with preexisting conditions cannot switch to a comparable or better policy, consumers trapped in the closed policies must either accept greatly inferior coverage or face bigger and bigger premium increases.

Download the lawsuit filed in San Francisco Superior Court here

According to legislative records, it was Blue Shield’s own past business practices, resulting in Death Spirals for consumers, that spurred the Legislature to adopt the same 1993 law that Consumer Watchdog and Whatley Kallas, LLC now allege the company has violated.

The policy closures are taking place among certain insurance plans in the individual market. California law requires that when health insurers close a policy the insurer must either offer consumers new comparable coverage, or minimize rate increases on the closed policies.

Two regulatory agencies – the California Department of Managed Health Care (“DMHC”) and the California Department of Insurance (“CDI”) – oversee different segments of Blue Shield’s insurance business. In the lawsuit, Blue Shield is accused of illegally closing eight policies regulated by the DMHC in 2010, and announcing it would close 23 policies regulated by the CDI on July 2, 2012 without offering consumers comparable policies or limiting rate increases as required by law.

Consumer Watchdog and Whatley Kallas, LLC settled a similar class action lawsuit last year targeting Blue Cross of California’s illegal Death Spiral practices. Read more about that lawsuit and settlement here. Under the terms of that settlement, Blue Cross must both offer consumers in the closed policies access to comparable coverage and limit rate increases in the closed policies if consumers choose to remain enrolled in the older, closed policy.

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Consumer Watchdog is a nonpartisan consumer advocacy organization with offices in Washington, D.C. and Santa Monica, CA. Find us on the web at: http://www.ConsumerWatchdog.org

WhatleyKallas has earned a national reputation-based on trust, respect, demonstrated commitment and tangible results-in connection with its representation of healthcare providers and members of the organized medicine community. The firm’s lawyers have negotiated settlements with most of the major health insurers in the country on behalf of hundreds of thousands of consumers, physicians and medical associations that resulted in monetary relief and revolutionary practice changes valued in the billions of dollars. These settlements fundamentally changed the way managed care companies do business. The lawyers of WhatleyKallas have been repeatedly recognized in legal publications, such as “The National Law Journal” and “American Lawyer”, by their peers and by leaders of organized medicine for our work in the healthcare field. For more information, go to: http://www.whatleykallas.com/

California, Health Care

Movie Rating: Not Suitable For Health Insurance Executives

by Consumer Watchdog

One million Californians will be slammed today with health insurance rate hikes as high as 20%. Consumer Watchdog Campaign has a solution.

Watch this short, funny movie trailer about an alternative future with no rate hikes, and share it with your friends.

Health insurance price hikes recur more often than Groundhog Day — Spring, Summer, Winter, Fall. Now there’s something Californians can do about it.

Go to www.JustifyRates.org to download, print and sign the ballot petition to stop outrageous rate hikes. The short movie trailer tells the story. Watch it. Post it. Tweet It.

Let your friends know what’s happening and what they can do about it!

Help us beat the health insurance companies at the ballot.

California, Health Care

California Insurance Commissioner Can’t Stop Aetna’s “Unreasonable” Rate Hikes

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Small Businesses Stuck With Unjustifiable 8% Rate Hike, 30% Increase Over Last 24 Months Says Department of Insurance

The California Department of Insurance has announced that Aetna is imposing an 8% annual health insurance rate hike on its small business customers despite state actuaries’ findings that the increase is “unreasonable” and not supported by data.  Consumer Watchdog Campaign says this demonstrates the urgency of voters passing its proposed ballot measure to make health insurance companies justify their rate hikes and get permission before raising rates.  The initiative, which is currently being circulated for signatures to place it on the November 2012 ballot at grocery stores and online at JustifyRates.org, would allow the Insurance Commissioner to reject a rate hike such as Aetna’s if state experts find it unreasonable.

“Until the Commissioner is allowed to say no to unjustified and excessive rate hikes, small businesses and families in California will continue to pay more than they should for health insurance,” said Jamie Court, proponent of the proposed allot measure and a director of Consumer Watchdog Campaign.  “Aetna’s rate hike is the poster child for why health insurance should be required to get approval before rate hikes take effect.”

According to the Department of Insurance, the Aetna subsidiary that sells health insurance in California earned huge profits in 2011 and paid a $1.7 billion dividend to its parent company last year.  Additionally, while the insurance company claims that it needs the rate increase to cover increasing medical costs, Aetna’s own data and documents don’t support that claim, which also conflicts with national data about medical cost inflation.

The ballot initiative being circulated by Consumer Watchdog Campaign would require insurance company CEOs to justify under penalty of perjury that rate hikes are necessary and allow the Insurance Commissioner to reject any hike determined to be excessive.  Similar rules have applied to auto and home insurance in California and have saved motorists in California over $62 billion since 1988 when that law took effect.  The initiative also prohibits the use of unfair rating factors in health, home and auto insurance.

“Insurance companies like to say that there is already regulation of health insurance in California, because insurers are required to make their rate increase plans public.  But if a company can ignore official findings that a rate hike is unreasonable and jack up rates whenever they want, then the law needs to change,” said Court.

The petition to place the initiative on the ballot can be signed outside supermarkets or by going to www.JustifyRates.org and downloading the one-page petition.

California, Health Care

Anthem Plans Rate Hikes Up To 20% for Nearly 600,000 Californians

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( – promoted by Brian Leubitz)

As 2nd Anniversary of Federal Health Reform Law Approaches, CA Ballot Measure Seeks to Control Skyrocketing Health Insurance Rates.

Anthem Blue Cross will raise health insurance rates for nearly 600,000 Californians by as much as 20% on May 1. A ballot initiative to make health insurance more affordable by regulating premium increases is necessary to protect Californians from excessive rate hikes, said Consumer Watchdog Campaign today.

Friday is the 2nd anniversary of the federal health reform law, which will require every American to have health insurance by 2014 but does not control what private health insurance companies can charge. The ballot initiative proposed by Consumer Watchdog Campaign would require health insurance companies to publicly justify rates, under penalty of perjury, and get rate increases approved before they take effect.

“Every time insurance companies force another double-digit rate increase on consumers they make the case for our ballot initiative to rein in excessive rate hikes. If Anthem had to include a copy of our petition in the rate increase notice it mailed to more than half a million consumers, we’d already have the 505,000 signatures necessary to qualify the measure for the November ballot,” said Carmen Balber with Consumer Watchdog Campaign.

The ballot measure would regulate health insurance policies that cover 5.3 million Californians. 35 states have the power to reject excessive rate increases, but California does not.

“The Affordable Care Act ends some of health insurers’ worst abuses – like cancelling coverage when patients get sick, or charging women more just for being women. But the law falls short on cost control. Health reform cannot succeed if we don’t put the brakes on skyrocketing insurance premiums. Strong rate regulation will lower premiums, give insurers incentives to cut spending and save health reform,” said Balber.

On Monday, the U.S. Supreme Court will begin hearing oral arguments in a case that will determine whether the law’s mandate that individuals purchase insurance violates the Constitution. Regardless of what the court decides, the experience with health reform in Massachusetts shows that consumers will need the protection of rate regulation to hold down insurance prices, said the group.

Consumer Watchdog released a report last year demonstrating how rate regulation has begun to curb insurance premiums in Massachusetts, where the mandate that people buy health insurance — the model for the 2010 federal reform law — failed to control costs. Other states that instituted or strengthened state laws requiring rate review and approval of health insurance rates, including New York, Oregon and Maine, have also seen cost-control results. States without regulation of health insurance rates have seen massive and unjustified rate increases take effect with no power to stop them.

A new report from the California HealthCare Foundation finds that 38% of Californians say the cost of their health insurance went up in 2011, and 37% delayed getting health care they needed because of costs.

“The reality is that consumers will not purchase insurance they cannot afford, and insurance prices become more out of reach for families every year,” said Balber. “Experience in states from California to New York has shown that rate regulation is the only way to force insurance companies to open their books, justify spending, and block excessive profits.”

The Centers for Disease Control and Prevention reported last week that 1 in 5 Americans are burdened by medical debt and half of them are unable to pay the debt at all. Health insurance premiums in California increased at a pace five times the rate of inflation in the last decade, according to the California HealthCare Foundation.

Download the Consumer Watchdog Report, “Health Reform and Insurance Regulation: Can’t Have One Without The Other”.

Read more about the initiative at www.JustifyRates.org.

Health Care

Clock Is Ticking: Bill To Curb Health Insurance Rates Squeaks Past Lobbyists In Key Vote

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The health insurance industry's lobbying muscle in the California Legislature is legendary. It's the reason that the state's insurance commissioner remains all but toothless to reject outrageous spikes in health insurance premiums and rates, unlike in a majority of other states. So it's not a shock that a new version of a bill to let the state insurance commissioner reject or modify health insurance premiums barely squeaked through the state Assembly's Appropriations Committee late last week with the minimum 9 votes.

The health insurance industry's lobbying muscle in the California Legislature is legendary. It's the reason that the state's insurance commissioner remains all but toothless to reject outrageous spikes in health insurance premiums and rates, unlike in a majority of other states. So it's not a shock that a new version of a bill to let the state insurance commissioner reject or modify health insurance premiums barely squeaked through the state Assembly's Appropriations Committee late last week with the minimum 9 votes.

+++Take Action Here to Cut Insurance Premiums, Send a Message to Your Legislator+++

The bill will face another firestorm of industry lobbying when it comes up for a full Assembly vote in a few days.

This legislation ought to be a slam dunk, after Blue Shield tried to jam through premium increases of up to 86% in a single year. Aetna and Blue Cross weren't much better. The only reason any insurer backed down even a little was because of public rage, which is not a good regulatory tool in the long run. When every Californian is required to show proof of insurance as of 2014, Californians will be even more in need of protection from insurance industry greed. And nearly every major newspaper has supported health insurance regulation–the LA Times made its second strong editorial argument Tuesday. (text of editorial is below)

So what was up with the two Democrats–Charles Calderon and Jose Solorio–who voted against the rate regulation bill (AB 52, Mike Feuer)? First they reportedly tried to get author Feuer to accept last-minute substantive changes without a chance to examine what they meant–and Feuer rightly refused. Then Calderon and Soloio voted no. Hmm. Solorio is among the top five recipients of insurance industry money in the Assembly. And Calderon is the sponsor of a bill (AB 736)–strongly supported by the health insurance insurance and broker industries–that would remove consumer protections from health broker misdeeds or errors and indirectly raise health insurance premiums.

Two million Californians lost their insurance during the recession, bringing the state's total uninsured to 8 million. From the mail we get, a whole lot of people are right on the edge of having to drop Health insurance. It's long past time for the largest state in the nation to get a grip on health insurance spikes in the high double digits, even as overall medical inflation sinks to around 4% a year. Something is wrong with this picture, even if it's just right for insurance companies' record profits.

We hope Calderon and Solorio were just making a procedural protest and that they'll protect consumers, not insurance company profits, when the Assembly votes this week on AB52. It'll be close. Here's the button to Take Action.

A lid on health insurance rate increases

California regulators should be given the power to reject unreasonable increases in health insurance premiums.

May 31, 2011

Opponents of a bill that would allow state regulators to reject unreasonable increases in health insurance premiums are stepping up their attacks on the measure, contending that it would push premiums even higher and make healthcare less available. These arguments are a smokescreen, and lawmakers shouldn't lose sight of the need to give consumers of health insurance the same protection they have in auto and homeowners' policies.

One allegation is that the bill — AB 52, sponsored by Rep. Mike Feuer (D-Los Angeles) — would enrich the consumer advocates who challenge proposed rate increases. That charge is based on the bill's requirement that insurers cover the "reasonable" fees and costs incurred by advocates who make a "substantial contribution" to the ruling by regulators or the courts. The same perfectly sensible language is in Proposition 103, the initiative that empowered state regulators to reject excessive automobile, property and casualty insurance rates.

Giving consumers the opportunity to participate in rate reviews is a valuable counterweight to the shifting policies in Sacramento, where regulators' zeal often depends on who won the last election. And the "substantial contribution" requirement for getting fees reimbursed deters frivolous challenges. Consumer Watchdog, an advocacy group, says its interventions have reduced insurers' proposed auto, home and earthquake premiums by more than $2 billion since 2000; insurers have had to spend an additional $5 million to cover the consumer group's expenses.

Smaller premium increases might seem like a good thing to consumers, but evidently doctors and hospitals feel differently. Their trade associations are opposing AB 52, arguing that it could artificially reduce the rates insurers pay them. Such reductions, they say, could persuade more providers not to take Medicare and Medi-Cal patients because they count on reimbursements from private insurers to cover some of the cost of government-insured patients. But those cross-subsidies are precisely the sort of distortions and inefficiencies that policymakers should be trying to eliminate from the healthcare system, not prop up.

The healthcare reform law Congress passed last year tries to combat cross-subsidies, and it limits insurers' profit margins by tying them to the amount spent on medical care. That link, however, gives insurers a perverse incentive to grow their profits by inflating the amounts they pay doctors and hospitals. That's a good reason to give state regulators the power not just to review rates, as California law now provides, but to reject them when they're unreasonable. Here's another: As of 2014, the healthcare reform law will require all adult Americans to obtain health coverage. Regulators ought to have the power to stop insurers from gouging that captive market.

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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.