A bill introduced in the California legislature this week seeks to force health insurers to notify consumers about coverage premiums that state regulators have deemed "unreasonable." The legislation would also require insurance companies to give those consumers time to shop for a new plan.
Under existing law, the California Department of Managed Health Care and the California Department of Insurance review rate hikes proposed by the insurers and health plans each regulates.
But when the agencies conclude that an increase is unjustified, there's not much they can do. The regulators can ask the insurer to rescind the increase, but the company is not legally obligated to comply. The two departments' only recourse is to post the information on their websites.
"Frankly most consumers aren’t looking over a Department of Managed Health Care or Department of Insurance website," says Anthony Wright, executive director of Health Access California, which sponsored the bill. "And even if they did, it would be hard for them to figure out whether the plan they're in has the unreasonable rate."
SB 908, introduced by Sen. Ed Hernandez (D-West Covina), would require an insurer to send a written notice to its customers anytime regulators found the price hike for a particular plan to be unjustified. The insurer would have to send the notice at least 60 days before the policy's renewal date, to give consumers time to shop for a new plan.
The California Association of Health Plans is studying the bill, says spokeswoman Nicole Kasabian Evans, while suggesting that it may be unnecessary.
Open enrollment periods under the Affordable Care Act already allow individuals 90 days to compare plans and to switch into new ones if they choose, she says.
And noting that regulators post information about rates that are deemed "unreasonable" online, Evans argues that "we already have a pretty good system out there."
The legislation is likely to go before its first committee hearing in March, says Hernandez spokesman Tim Valderrama.