Insurance Industry Kills Bill That Would Have Forced them to Justify Hikes

by Brian Leubitz

Well, score another win for the insurance industry over consumers:

Feuer: “We’ve hit a temporary roadblock on the bill.  The bill remains on the floor of the Senate, however, and I’m going to work very hard between now and next January to change this dynamic.”

Health insurance companies and business groups have fought the measure fiercely.  The California Association of Health Plans says the bill would sharply increase costs to the state – without doing anything to lower the cost of health care. (Cap Public Radio)

Of course they say it would increase rates, because they can. Not because they have any data to show that is true.  Not because rates in states that have similar measures are higher, but because they can.

However unfortunate, there are enough anti-consumer Democrats to kill the bill.  Let’s be clear here, this is nothing about being moderate.  This is about insurance industry contributions controlling several Democrats in Senate, to the detriment of their constituents.  

The bill will be back in next year’s session, by then we can hope that these as yet unnamed legislative cowards can be convinced of the error of their ways.  We need leaders who will stand up for California consumers, rather than just bending to the will of AHIP.

The San Francisco Chronicle reported this morning on the front page about the landmark insurance reform we expect to be spending the next fifteen months working for. Insurance companies, the legislature and recent court rulings have all turned against consumers, much like they had in 1988, when California voters struck back with the toughest insurance reform in America: Proposition 103.

The San Francisco Chronicle reported this morning on the front page about the landmark insurance reform we expect to be spending the next fifteen months working for.

Insurance companies, the legislature and recent court rulings have all turned against consumers, much like they had in 1988, when California voters struck back with the toughest insurance reform in America: Proposition 103.

By 2014, all of us will be required to buy health insurance or face tax penalties. The problem is that health insurance companies can charge whatever they like and raise premiums at will in California. This is the same scenario that drivers faced in 1988 when mandatory auto insurance laws forced drivers to pay for policies many couldn’t afford. Voters then required auto insurers to pay drivers a 20% refund and to get permission before they ever raised rates again.

Just like in 1988, insurance stalwarts in the statehouse are now holding insurance premium regulation hostage. The companies have given the politicians millions so they can make billions overcharging you. And, as in 1988, the California Supreme Court has issued several rulings taking away the right of policyholders to hold insurance companies accountable.

If we go to the ballot with a 1988-style 20% rollback in health insurance premiums, will you be with us?

Our “Proposition 103 Part Two” ballot measure will have to be filed by November 2011 in order to begin signature collection so it gets on the ballot for November 2012.  

The main provisions of the ballot measure are as follows:

1- A 20% rate rollback in health insurance rates to reverse five years of unwarranted double-digit price gouging;

2- Require health insurance companies to seek permission from the elected insurance commissioner before raising rates, as auto insurance companies must, and application of other Prop 103 protections to health insurance companies;

3- Prohibit all insurance companies from raising your rates or refusing to renew you because of your credit score, claims or insurance history;

4- Allow consumers to join a non-profit public health plan administered by CALPERS instead of having to buy insurance from private insurance companies;  

5- Correct court rulings that have misinterpreted the law to benefit the insurance industry;

6- Create a “three strikes and you’re out of California” law for insurance companies that repeatedly violate the state’s consumer protection laws

7- Prohibit health insurance companies from forcing you to sign arbitration agreements as a condition of enrollment.  

We want to go to the ballot in November 2012. Will you be with us? Click here to sign up!

Together we can move health care reform forward in California and America.

________________________________

Jamie Court is president of Consumer Watchdog and author of The Progressive’s Guide To Raising Hell.

The California Senate Appropriations Committee is expected to vote on Thursday on AB 52, a bill which will give the California Insurance Commissioner, Dave Jones, the ability to regulate health insurance premium hikes. This is something that many other states have the power to do, but which California’s health insurance companies have fought tooth and nail to prevent. Finally there’s a chance they could lose this battle.

Thursday is a crucial vote — do or die. If the bill is not passed out of the Appropriations Committee it is dead.  If it does pass it will go to the Senate floor for a vote (it’s already passed the Assembly), which must happen by September 8th.

There are nine committee members, six Democrats and three Republicans.  None of the Republicans is expected to vote for the bill, therefore five of the six Democrats’ votes are needed.  

Currently we have no idea whether all the Democrats on the committee are in favor of the bill or not.  Here are their phone numbers — it’s time to call them and find out exactly where they stand and indicate your support, as a California citizen, of the bill.

Senator Christine Kehoe (Chair) — (916) 651-4039

Senator Elaine Alquist — (916) 651-4013

Senator Ted W. Lieu — (916) 651-4028

Senator Fran Pavley — (916) 651-4023

Senator Curren Price — (916) 651-4026

Senator Darrell Steinberg — (916) 651-4006

If you find out the position of any of these Senators on AB 52, please post a comment!

You can find out if any of these Senators is your Senator, and if not you can call your California State Senator as well and ask them to support AB 52. Just type in your zip code on this easy to use web page to find your Senator’s name and phone number.  

As I was writing this diary, I received email from Rick Jacobs, Chair of the Courage Campaign, which has been active in pushing AB 52 through the Legislature:

Are you tired of Kaiser, Blue Cross, Aetna and other insurance companies raising your rates without any recourse? Just last week, Kaiser announced that it would raise rates on Los Angeles teachers, costing the LA Unified School District $40 million a year, even though Kaiser is one of the most profitable health insurance companies in America.

We can stop this madness. This week the California Senate Appropriations Committee will decide whether AB 52 even makes it to the Senate floor for a full vote. Kaiser and friends have spent millions on legalized bribes to kill it.

You have the power to force our Senate to act for you — not Kaiser, not Blue Cross and not Anthem. Send a quick email to the Appropriations Committee telling them we are watching them and expect them to work for us, not for giant health insurance corporations.

You helped pass AB 52 out of the Assembly. This bill would simply allow the state to approve or deny the outrageous rate hikes Kaiser and friends propose. Of course, CEOs like Kaiser’s George Halvorson would rather keep making millions of dollars, but that’s not good for you or me. It’s just good for him and his rich executives who are unaccountable.

Tell the Senate Appropriations Committee to vote yes on AB 52 because they work for the people, not for Kaiser, Blue Cross or Aetna.

Let’s get the bill out of committee and then we can push like hell to win in the Senate.

You can participate in the Courage Campaign’s organized emailing to the Committee members by using their interface.

Kossacks like Seneca Doane and others have been encouraging Kossacks for months to help get this bill passed.  Now it’s all coming down to a couple of weeks.  Will you help?

Again, here are the people to call:

Senator Christine Kehoe (Chair) — (916) 651-4039

Senator Elaine Alquist — (916) 651-4013

Senator Ted W. Lieu — (916) 651-4028

Senator Fran Pavley — (916) 651-4023

Senator Curren Price — (916) 651-4026

Senator Darrell Steinberg — (916) 651-4006

(Seneca Doane has a great diary where he is keeping track of the votes and one here with all the phone numbers. If you know somebody in these districts, be sure they call in. Local opinion matters!  Sens. de Leon, Alquist, Hernandez and Rubio should all be top targets.   – promoted by Brian Leubitz)

Last week, I had a brief chance to speak with Insurance Commissioner Dave Jones, and before he and I had to attend to other matters, he briefly stressed the importance of AB-52’s pre-increase rate regulation.  The first thing that you have to consider, of course, is that AB 52 would greatly expand the Insurance Commissioner’s power.  Now, Jones has been pushing the bill even when Poizner was calling the shots, so there must be something else.

That something else is the poor division between the Department of Insurance, which Jones heads, and the several other departments in the executive branch that manage health insurance.  When it comes down to it, the elected Commissioner, under the current system, actually has relatively little power in that whole process.  AB 52, at its core, is a simple regulation that would give the Dept. of Insurance the power to block unreasonable rate increases.

For an industry that has some rather unclean hands, it unsurprisingly fighting this tooth and nail.  It is a majority vote measure, so they must rely on a few Democrats to hold up the process.

Tomorrow’s vote is the Senate Health Committee, and under normal circumstances, with two co-authors of the bill on the committee, would likely get at least a party line vote.  But these are hardly normal circumstances, and many of these Democratic Senators have a insurance money habit that is quite hard to break. nyceve has a diary up at dKos with the names and numbers of the Senators on the Committee, which you can also find below the fold.  If I had to prioritize my calls, I would go Hernandez, Alquist, Rubio, de Leon, Wolk, DeSaulnier, in that order.  But, if you are a constituent of any of these Senators, please, please call them right away.

There will be more work to go to get this through the Senate, and then pressuring the Governor to sign it.  However, this important first step should not be neglected.  Get those phone calls in as soon as possible.

  Senator Ed Hernandez (Chair) — 916-651-4024

  Senator Elaine Alquist — 916-651-4013

  Senator Kevin de Leon — 916-651-4022

  Senator Mark DeSaulnier (AB 52 co-author) — 916-651-4007

  Senator Michael Rubio — 916-651-4016

  Senator Lois Wolk (AB 52 co-author) — 916-651-4005

Los Angeles Times business columnist Mike Hiltzik offers a stark choice to state legislators in his Wednesday column. What'll it be, has asks: the millions of dollars that the insurance industry pours into your campaigns and treasure chests, or the millions of Californians battered by health premiums that kill the family budget or company benefits account? Plus the 8.2 million Californians with no health insurance at all?

Los Angeles Times business columnist Mike Hiltzik offers a stark choice to state legislators in his Wednesday column. What'll it be, has asks: the millions of dollars that the insurance industry pours into your campaigns and treasure chests, or the millions of Californians battered by health premiums that kill the family budget or company benefits account? Plus the 8.2 million Californians with no health insurance at all?

The choice Hiltzik lays out is between legislation (AB52 by Mike Feuer) that would finally give the state insurance commissioner the power to deny or modify unreasonable health insurance rate increases before they go into effect, and the exaggerated or outright false charges being slung by the industry. That opposition campaign is just a  cover for the real issue: the power of industry campaign money and its lobbying force.

From 2007 through this year, for example, Anthem Blue Cross has made campaign contributions totaling nearly $5 million to candidates, parties and political action committees, according to state records. Blue Shield has contributed more than $2.3 million in the same period…..

Across the country, prior approval of healthcare rates is becoming more the norm, now effective in 34 states and the District of Columbia for at least some policies, according to the Kaiser Family Foundation. The procedure closes a gap left by federal healthcare reform that leaves rate regulation to the states and provides only loosely for premium review. Once again, AB 52 provides state legislators with a chance to declare whom they really represent — their voters or their campaign donors.

The insurance industry is going after legislators that it has contributed to, or who otherwise look susceptible. That helps explain why the legislation barely squeaked through a key committee vote last week after two Democrats voted against it.

The final vote in the Assembly has to come by Friday. Lobbyists will be swarming the halls outside the chamber, intending to ride the last-minute chaos of speed-voting to kill the rate regulation bill. Among the lies the lobbyists will be forcing down legislators' throats is that regulation will somehow raise, not lower, insurance premiums. Again, Hiltzik nails it:

Last year both Aetna and Anthem backed away from huge rate hikes after independent actuaries found glaring mathematical errors in their rate filings.

A study in 2009 by the New York state insurance department found that these sorts of errors, and worse, were rife under that state's then-deregulated system, which resembled California's toothless regime. New York found that insurers routinely under-reported such errors and refunded (retroactively) only about a third of the ill-gotten excess to policyholders. The study helped goad lawmakers there into reinstating prior approval after about 15 years without it.

As it happens, California's health insurance lobby has tried to use New York's experience as Exhibit A for the case against prior approval. The association contends that five of the 10 states with the highest individual healthcare premiums are subject to prior approval, with New York leading the list. There's a problem with this claim, however: New York's prior-approval rules went into effect only this year. In other words, New York's high individual premiums are the result, if anything, of the absence of prior approval.

When I asked a CAHP spokeswoman where the figures came from, she said they conducted "some unique research." That's one way of putting it.

Even if AB52 passes the Assembly, it still has to take the same tortured path through the state Senate. The outrageous rate-spiking by insurance companies last year and this ought to be the final shove for honest health insurance regulation in California, just like the state has for auto and homeowner insurance. But in today's legislature, nothing is sure. To take action with a message to your legislator, click here.

If you've read this far and want to know more,  Read Consumer Watchdog’s new report on how rate regulation works to hold down premiums. And see what Sen. Dianne Feinstein says about the need for regulation.

————

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.

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.

————-

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.