CA Ballot Initiative Gives State Control over Health Insurance Rates

If a ballot proposition passes later this year, the state of California will be in control of setting insurance rate increases.

Proposition 45 has already been placed on the ballot for 2014. Itwould allow the state’s insurance commissioner to reject rate increasesit deems excessive. Currently the commissioner can deem a rate to beexcessive but does not have the power to prevent a rate increase fromtaking place.

Consumer Watchdog is the group which gathered signatures to put proposition 45 on the ballot. It claims that betweenApril 2012 and November 2013 premium hikes which were deemed excessive(but went through anyway) cost nearly a million Californians a total ofmore than $250 million.

Covered California has so far been non-committal about the possible impact of proposition 45. Executive Director Peter Lee told the LA Timeshis agency was still reviewing it; however, he also suggested it waspossible giving regulators veto power over rates could lead to moreinsurers withdrawing from the marketplace.

Leading California insurers have reportedly put$25 million behind a push to defeat proposition 45. The effort, whichgoes under the name Californians Against Higher Health Care Costs, has aweb page arguing againstthe measure. Proponents of Prop. 45 see the spending by California’slargest insurers as an example of the kind of non-medical expense whichnecessitates sharp rate increases.

California already uses a similar system to control rate increases for auto insurance. Consumer Watchdog’s president notes that California is “the only state in the nation to see a decrease in auto insurance prices.”