Schwarzenegger proposes insurance rate review, but not regulation

July 7, 2010

Gov. Arnold Schwarzenegger, who has opposed regulating the rates charged by health insurance companies, has submitted a proposal to the federal government for a state program to review and publicize rate increases before they go into effect.

The program, according to the governor’s administration, is in line with the federal health reform legislation approved by Congress and President Obama earlier this year. The state is seeking a $1 million grant to add staff and contracted services to the Departments of Insurance and Managed Health Care.

Most of the money would go for actuaries, who will be hired to review the insurance company rate increase proposals and to check to see that those rate increases reflect increases in the core cost of providing health care. Some of the money would also go for computers and software to help make the rate setting process more transparent. The state plans to post rate increase proposals on its web sites and provide easy-to-follow information on changes in the cost of physicians, hospitals and other health services.

Democrats in the Legislature have been pushing for full-fledged rate regulation, giving the state the power to approve or deny rate increases sought by insurance companies. But Schwarzenegger has opposed that idea in the past, and nothing in this grant proposal suggests that he has changed his mind.

Here is an excerpt from the proposal:

The availability of grant funding will enable the DMHC and the CDI to begin to develop a more robust rate oversight capability to ensure that consumers are confident that the rates they are paying for their health benefits are truly reflective of the underlying cost factors. Consumer confidence will be further enhanced by state legislation to provide cost data on underlying factors in a readily accessible format so that consumers are better informed about the costs of their health care and health care coverage choices. Further, these funds will allow both departments to better coordinate and integrate information gathering and rate oversight functions. Finally, the ability to purchase greater access to actuarial services will permit both departments to increase the level of sophistication with which they are able to fulfill their joint mission of consumer protection.

To read the whole thing, go here.

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One Response to Schwarzenegger proposes insurance rate review, but not regulation

  1. Pingback: » Governor proposes state review of health insurance rates &#124 Health Insurance and You

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