Rate regulation bill clears committee

April 26, 2011

A key Assembly committee took the first step Tuesday toward regulating the rates health insurance companies can charge their customers.

The Assembly Health Committee passed AB 52, carried by Assemblyman Michael Feuer, which was strongly opposed by industry groups.

The bill would allow the state’s Insurance Commissioner and the Department of Managed Care to approve or deny rate increases sought by insurance companies and health plans.

Rate regulation was left out of the federal health reform bill passed last year. Instead, that bill and a companion law passed in California require insurers to publicly disclose their planned rate hikes and hire an independent actuary to determine if the increases are reasonable. But the new rules stop short of allowing the state to regulate those rates, even if they are found to be unreasonable.

AB 52 would change that, implementing a regulatory system similar to one the state has had in place for car insurance since 1989.

Consumer advocates hailed the committee vote Tuesday night.

“The passage of the rate regulation bill through committee is a good first step toward the rate relief that Californians so desperately need, as we continue to struggle with the one-two punch of an economic recession and rising health care costs,” said Anthony Wright, executive director of Health Access California.

But health plans said the bill was the wrong way to constrain the cost of health insurance, which the companies said is largely driven by the cost of doctors, nurses, labs, hospitals and drug companies.

“Premium increases are just a symptom of a much bigger problem,” said Patrick Johnston, president and CEO of the California Association of Health Plans.

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