A bill allowing California state regulators to prohibit excessive health insurance rate increases moved one step closer to passage after clearing a key legislative committee, despite strong opposition from major insurers and the California Association of Health Plans.
In addition to allowing the department of health insurance to approve, deny or modify proposed hikes in health insurance premiums, co-pays or deductibles, the bill would allow any consumer to "intervene" in a regulator's decision by filing a civil lawsuit. That essentially means anyone acting in the public interest could sue health insurance regulators if they disagree with a rate-hike decision, reports California Watch.
Assemblyman Mike Feuer, who proposed the bill, argued that health insurance rates are too high because insurance companies are banking massive profits. California Insurance Commissioner Dave Jones said the state's top five insurers collectively banked more than $11 billion in profits last year alone, according to the Associated Press.
However, the California Association of Health Plans criticized the bill as unnecessary, reports The Hill's Healthwatch. "At the same time the Legislature is being forced to make deep spending cuts in essential programs, (this bill) will create an expensive and expansive new bureaucracy in the offices of the state insurance regulators and impose burdensome new requirements that will further increase the cost of coverage," the group said.
Charles Bacchi, executive vice president of the California Association of Health Plans, testified before the Assembly health committee that the bill doesn't address the increase in underlying medical costs and would require a $40 million bureaucracy to execute its intentions, the Associated Press reports.
Bacchi also predicted that California health insurers will see more financial pressure when health reform policies come into effect and expand the number of Californians on Medicaid by 3 million people, notes California Watch.