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Consumer Watchdog proposes new ballot initiative to curb health insurance rate hikes

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California health insurance industry being eyeballed

California Health Insurance Consumer Watchdog, a non-profit advocacy group focused on the insurance industry, has proposed a new ballot initiative to the California Legislature that would put a stop on rising health insurance premiums. The organization claims that the state’s largest insurance companies have increased premiums by 20% since April 1, 2012. Consumer Watchdog suggests that these companies will raise rates a second time in May, and increase that will likely be 20% again. These higher rates have affected more than 1 million Californians, many of whom are already struggling to pay for health insurance coverage.

In California, insurance regulators do not have the authority to modify or deny health insurance rate increases. The Department of Insurance, lead by Commissioner Dave Jones, campaigned to attain this authority last year. The agency was met with initial success, garnering favor from many of the state’s lawmakers. The effort was ultimately a failure, however, and has not yet been revisited due to other legislative concerns. Consumer Watchdog claims that, without regulatory authority, insurance companies have no incentive for accountability and transparency. Rate increase information is not available to the public as insurers believe that such data would be ill-received.

The ballot initiative is meant to require insurance companies to disclose information concerning rate increases. The ballot would also institute a requirement for insurers to justify higher rates in a public setting as well as receive approval from regulators before collecting on higher rates. Policyholders would be able to question the rate increases during public sessions and ask for more information concerning that matter, which will be provided by both insurance companies and state regulators. The initiative has already garnered community support, but it has found staunch opponents in insurers like Aetna, Anthem Blue Cross, and Health Net.

Opponents of the initiative claim that more regulatory authority would make the California health insurance industry less flexible and would cause problems with insurers’ ability to comply with coming health care reforms. Furthermore, consumers may show anger towards insurers for the information disclosed regarding rate increases. This anger could harm these businesses and cause consumer exodus.

 

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