California health insurers may need state approval for future rate increases

Health insurance companies in California may soon have to provide justification for any rate increases higher than 7 percent per year if the state assembly's health committee gets its way. Legislators on Tuesday, led by Assemblyman Dave Jones, passed a bill that would force insurance companies and most PPOs to obtain Department of Insurance approval, reports the Los Angeles Times. Similarly, HMOs would need approval from the state's Department of Managed Care for equivalent rate increases. 

The committee is hoping to capitalize on the recent success of national health reform efforts, in combination with lingering anger over Anthem Blue Cross's announcement that it will increase premiums for some individuals by as much as 39 percent.

"Now that Congress has mandated that every American must show proof of owning a health insurance policy of face fines, California must ensure that the prices that insurers charge for coverage are fair," said Jerry Flanagan, healthcare policy director for Consumer Watchdog.

Insurance lobbyists like Anne Eowan, of the Association of California Life and Health Insurance Cos., call the bill "premature" and maintain that hospitals, doctors and pharmaceutical companies are responsible for their rate hikes, rather than a desire to increase profits. Opponents also say that such "new bureaucracies" could cause an increase in taxes and a decrease in the swiftness of the handling of claims.

Similar bills in 2007 and 2009 were spearheaded by Jones, and ultimately failed to be signed into law. In particular, a bill passed in 2007 by the state's assembly failed to pass through the Senate by a single vote. 

To learn more:
- read this Los Angeles Times article
- here's the bill