Archived: AB 52 Would Give Insurance Commissioner Power to Reject Excessive Health Insurance Rate Hikes

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To protect consumers, the most important additional California health insurance reform we need is to give the Insurance Commissioner the authority to reject excessive health insurance rates similar to how we regulate car and homeowners insurance rates. Most Californians are surprised (and disappointed) to learn that the Insurance Commissioner does not have the authority to reject excessive health insurance rate hikes. This is a missing piece of federal health care reform.

AB 52, by Assemblymember Mike Feuer, would give the Insurance Commissioner the authority to reject excessive health insurance rates. It recently passed the Assembly and was heard in the Senate Health committee yesterday, June 29. A vote was not taken.

After repeated attempts during my time in the Assembly, it is my hope that this legislation will finally become law.

AB 52 would go a long way toward curbing the double digit health insurance increases hard working Californians continue to see year after year. To put things in perspective, from 1998 to 2008, group health insurance premiums increased on average by 148%. It’s no wonder so many of us can’t afford to have health insurance and why more than 8 million Californians were uninsured last year.

The five largest health insurers in this country made a combined profit of $11.7 billion last year. That was a 17% increase over the 2009 profit of $9.9 billion and a 51% increase over the $7.8 billion made in 2008. And recently, health insurers started reporting additional increases in profits for the first quarter of 2011.

Further, such increases hurt small businesses as some have seen cumulative increases of 50, 60 and as high as 80%. Skyrocketing increases such as these force businesses and employees to absorb major costs or search for less expensive – and less comprehensive – coverage options. Small business owners need the stability that this measure provides through ensuring that rates cannot be raised more than once per year.

Proposition 103, which was passed by the voters in 1988, gave the Insurance Commissioner the authority to reject excessive premiums for auto, property and casualty insurance and has saved consumers and businesses tens of billions of dollars, but Proposition 103 did not include health insurance.

AB 52 corrects this omission and will give me the authority to reject excessive health insurance rate hikes and protect hard-working Californians from what has become an unrelenting barrage of premium increases.

This is why I am strongly urging the Senate Health Committee to pass this critical legislation. If you agree that its time to rein in excessive health insurance rate hikes, please call or email the members of the Senate Health Committee by visiting http://shea.senate.ca.gov/.

AB 52 may be taken up again on Wednesday, July 6.

Dave Jones is California’ Insurance Commissioner.

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