Controversy is raging in Sacramento over AB 52, a new bill that would give state officials the right of prior-approval over premium hikes for health insurance. The bill’s regulatory proposal is not new—prior approval of heath rates is law in 34 states as well as Washington, D.C.—and the process has been used in auto and homeowner policies since 1988. Steep rate increases, and the mistakes revealed in companies’ calculation of them, aren’t novel either. But health insurance companies and the California Association of Health Plans are vigorously opposing the measure, questioning AB 52’s power to address the health care cost increases that underlie premium hikes. They also say that the measure’s requirements would cost tax payers $30 million a year, though the bill’s fees to insurers ought to cover the cost of prior-approval. Proponents argue that such regulation would encourage fairer, more accurate rate increases, and point out that health insurance regulators can only use persuasion and public announcements—not actual rejection—to get companies to decrease their rates under existing California law. Should premium hikes be regulated? If not, how will increased costs affect low-income patients and those who need medical care the most?
Mike Feuer, Assemblyman, (D-Los Angeles); author of AB52, which prevents health insurance premiums from going up without the prior approval of the commissioner of insurance or the director of the Department of Managed Health Care
Patrick Johnston, president and CEO, California Association of Health Plans