07 July 2010

Editorial: Californians can Halt Outrageous Insurance Rate Hikes

Mercury News

Reasonable increases in health insurance premiums are inevitable. Medical costs are out of control, and while federal health care reform may eventually slow their growth, it won't happen quickly.

Most estimates put the expected increase in medical costs at around 10 percent this year, which is bad enough. So when Anthem Blue Cross announced a 39 percent increase in its California health insurance quote rates in February, the howls of protest reached the halls of Congress, where the outrage helped the cause of national health care reform. And in Sacramento, lawmakers began talking about regulating health insurance rates the same way we do car insurance.

Assemblyman Dave Jones, a Sacramento Democrat running for state insurance commissioner, is trying to put a check on the double-digit premium increases of recent years with a bill that would require health insurers to justify their rates, similar to current rules for auto insurers. Some 20 other states already do this.

AB 2578 passed the Assembly in June and will be heard by the Senate Appropriations Committee in early August. It should whip through the Senate and be signed by the governor.

After Anthem Blue Cross' humongous increase got everyone's attention, the company admitted that it had used a flawed formula and miscalculated the amount it needed. But its revised calculation, announced last week, still calls for a 20 percent rate increase.

Aetna Health Care had announced a 19 percent increase in California Aetna health insurance quotes earlier this year, but it, too, was forced to admit that it had made mistakes in its calculations and withdrew its proposed rate increase.

Doesn't it make you wonder how much past "miscalculations" have cost Californians and inflated insurance company profits over the years? If nothing else, Jones' legislation would force insurers to be more transparent about how they go about calculating their rates.

California has been down this path before. In 1988, voters approved Proposition 103, which forced auto insurance companies to justify their California health insurance rate increases. That proposition not only resulted in significantly lower rates, but it also brought more insurance companies into this market.

Insurance companies spent millions opposing Proposition 103, and they're fighting Jones tooth and nail on AB 2578. The Assembly vote was on party lines, with Republicans opposing the bill. Gov. Arnold Schwarzenegger has yet to take a position on it.

Jones' bill has the support of U.S. Sen. Dianne Feinstein. Earlier this year, she introduced legislation at the federal level that would enable the U.S. secretary of health and human services to review insurance companies' rate increase proposals and reject any that are not justified. Her legislation would only affect states that do not have the power to protect consumers. On the chance that Feinstein's bill does not pass, California should take care of itself.

The health care reforms enacted by Congress are only the first big step toward curing this country's ailing system. It will take at least a decade to fine-tune the legislation and find ways to drive down medical costs. For Californians, Jones' bill is crucial to help protect them from unreasonable rate increases in the interim.

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