California bill piles on rate hike disclosure requirements

California health insurers would have to provide more information to the public when they plan to hike premiums, under a bill approved by the state Legislature late last month. But lawmakers rejected a bill that would have imposed mandatory rate review on health plans, BestWire Services reports.

The Health Insurance Transparency and Accountability Act, SB 1163, would require insurers to give a 60 days' notice to consumers before raising rates and require them to show any hikes are "actuarially sound." They'd also have to post information about the increases on their websites and provide a reason in clear language. Plans would have to reveal the criteria used in rejecting coverage or offering coverage at a higher rate. Under the bill, rate filings would have to include certification by an independent actuary that any increase is reasonable. 

The bill's sponsor, Democratic Sen. Mark Leno, said public outrage over annual, double-digit increases prompted the legislature to act, according to the Associated Press. Anthem Blue Cross set off a firestorm earlier this year when it announced a 39 percent premium increase in California, which helped congressional Democrats pass healthcare reform. 

But some consumer advocates criticized SB 1163, saying the standard of "actuarially sound" is meaningless and will give insurers legal justification for significant rate hikes.

The bill awaits the signature of Gov. Arnold Schwarzenegger, who issued a statement praising it. SB 1163 was one of several health reform bills the Democratic-controlled Legislature passed last month, including ones establishing a state health insurance exchange and barring insurance rescissions.

The rate review bill rejected by lawmakers would have required health insurers to justify overhead costs and proposed rate increases, and would have given state regulators authority to reject premium increases they deemed excessive. 


To learn more:
- read the press release from the governor’s office

- read the BestWire Services article
- see the Associated Press article