Proposition 45 proposes to give the California insurance commissioner the right to approve changes to health insurance rates or “anything else affecting the charges associated with health insurance,” according to the proposition. It provides for public notice, disclosure and hearings on health insurance rate changes as well as subsequent judicial review. It also requires sworn statements by health insurers as to the accuracy of information submitted to the insurance commissioner to justify rate changes.
Consumer Watchdog, the driving force behind 45, forged a revolution in auto and homeowner insurance in 1988 with Prop 103, which created an elected insurance commissioner with the power to review and reject auto and homeowner rate hikes if those hikes were found to be onerous. Twenty-six years later the group seeks to give the commissioner the same review-and-reject power over the rapidly expanding health insurance market.
CW estimates annual savings to state health insurance consumers of up to $1 billion a year or $612 per family if the state insurance commissioner is given regulatory power to control rate hikes.
The problem, say opponents, is that Prop 45 proposes what they call unnecessary new regulation and costs — unnecessary because the Affordable Care Act, which went into effect nationally on Jan. 1, 2014, already provides health insurance rate oversight. Covered California, the state insurance exchange, is designed to implement the act’s provisions and provide new rules and regulations to protect state health care consumers.
The choice, says Dan Schnur of the Unruh Institute of Politics at the University of Southern California, is not between oversight and no oversight but of who and how that oversight is implemented.
Prop 45’s path to the ballot, as an initiative qualified through gathered signatures, was originally targeted for the November 2012 election. Sponsors submitted 800,000 signatures on May 18, 2012, but election officials said they would not have enough time prior to the November election to verify the signatures. As a result, the initiative was moved to the November 2014 ballot.
That move, arriving after the U.S. Supreme Court’s upholding of the provisions of ACA on June 28, 2012, and full implementation of the act in January 2014, may have come at an inauspicious time for passage by voters. Some groups that might have traditionally supported strict regulation of health insurance by a state commissioner now oppose Prop 45. They warn it could impede further rollout of CC and its ability to negotiate rate hikes within the marketplace.
Opponents cite CC’s independent commission’s authority to negotiate rates with health insurance plans and reject them if too expensive. They argue for giving CC’s commission a chance to work and more time to prove its effective advocacy for consumers within the marketplace.
Jamie Court, CW president, notes that Californians’ health insurance premiums have grown five times faster than the rate of inflation over the last decade and that regulation by a commissioner is necessary.
Prop 45 supporters include: California Democratic Party, California National Organization for Women, California Nurses Association, California Federation of Teachers, Insurance Commissioner Dave Jones, Superintendent of Public Instruction Tom Torlakson and U.S. Sens. Dianne Feinstein and Barbara Boxer.
Opponents include: California Republican Party, California Chamber of Commerce, California Medical Association, California Association of Health Plans, William Jefferson Clinton Democrats and the NAACP California.
Susan Kennedy, a CC board member, said the initiative could damage health-care reform in California “permanently, perhaps fatally. Even under the best-case scenario, enactment of this measure significantly complicates Covered California’s ability to enact health-care reform. I just think it’s the wrong time to add an entire layer of complication and risk to what we are attempting to achieve.”
Proponents say the state insurance commissioner has proven effective in regulating auto and home insurance rates and needs to be given the ability to do so in the health-care marketplace.