Monday, June 14, 2010 at 02:20PM
AB 2578, which seeks to impose prior approval requirements on health insurance rates, has passed out of the Assembly and is now before the California Senate Health Committee. A hearing is scheduled for June 23. (See here for the bill's current status.) [AB 2578 is sponsored, in part, by Dave Jones, now the formal Democratic candidate for Insurance Commissioner.]
Saturday, March 27, 2010 at 09:17AM According to Josh Richman from Inside Bay Area, California Insurance Commissioner reportedly does not support AB 2578. Poizner's spokesman said the following of the commissioner's views on this bill:
"He believes that additional bureaucracy envisioned in the bill doesn’t deal with the fundamental problem of health care — rising medical costs. Steve is committed to lowering healthcare costs, but President Obama demonstrated with his healthcare bill that he is not the least bit interested in lowering healthcare costs for consumers,” Agen said in an e-mailed reply to my query."
“Steve wants greater choice and competition in the healthcare marketplace through measures like reducing the number of mandates, increasing the use of electronic medical records, and giving consumers the freedom to purchase health insurance across state lines. He believes measures such as these, rather than more government incursion into our healthcare system, will make healthcare more affordable for California’s citizens.”
[Link to article/post here.]
This position is not in line with the Consumer Watchdog organization, which strongly supports prior approval of health insurance rates, but certainly consistent with Poizner's gubernatorial campaign platform.
AAB 2578, Prior Approval in AB 2578, Health Insurance, Prior Approval Thursday, March 25, 2010 at 04:04PM [By Richard G. De la Mora: For original post, please go here.]
Having unsuccessfully urged Congress to impose a national freeze on health insurance rates, Harvey Rosenfield has refocused his efforts on the California legislature and AB 2578.
Who is Harvey Rosenfield? He is, in his own words, the “author of California’s landmark property-casualty insurance rate regulation Proposition 103 – recognized as the most successful rate regulation in the country.” In fact, AB 2578, which cleared Assembly Health Committee earlier this week, includes the following provisions modeled closely on Proposition 103:
Finally, Mr. Rosenfield has made sure that he and his friends in the consumer advocacy industry are taken care of by advocating a provision requiring health plans to pay the consumer advocacy fees associated with fighting the health plan’s rate application.
We have seen this played out before, as our firm has represented property-casualty insurers in administrative and judicial matters involving insurance rates regulated under Proposition 103 since 1989.
While property-casualty insurers have had plenty of time to adjust to the dictates of rate regulation, health plans will face a steep learning curve if AB 2578 becomes law.
We are hopeful that this legislation will not become law. Even if it does, AB 2578 will likely face legal challenges and hurdles as did Proposition 103.
From our experience, we learned some of those challenges will be more successful than others. Nevertheless, if rate regulation comes to pass, a company’s goals can still be achieved provided that it has a complete understanding of the proposed regulatory system, plans ahead, has input into the development of regulations, and prepares itself for life after the system is implemented.
Barger & Wolenwill continue to keep our clients and friends apprised on new issues pertaining to AB 2578 via the firm’s Insurance Litigation & Regulatory Law Blog and the Life, Health & Disability Law Blog (as well as this blog). If you would like to be notified about upcoming events and seminars pertaining to AB 2578 and other issues, please subscribe to our firm blog via the RSS feed or send us your email so we can sign you up for alerts.
Thursday, March 25, 2010 at 03:02PM Because of the nature of our involvement and/or representation of parties involved in connection with Proposition 17, I have thus far refrained (and will continue to refrain) from offering any legal analysis on this proposition. However, I would like to highlight information relevant to this topic that may not have received much public attention, but is available in the public domain.
For instance, who first came up with the continuous coverage discount?
Well, if you ask a former Division Chief of Rate Regulation and Deputy Commissioner of Rate Regulation of the California Department of Insurance ("CDI"), the CDI did.
In a declaration filed in connection with the Proposition 17 ballot litigation, the former chief and deputy commissioner stated:
"In early 1994, during the course of a Field Rating and Underwriting Bureau examination of a large market share insurer, I was contacted by the Bureau Chief for the Field Rating and Underwriting Bureau who indicated that the rate analyst conducting the examination determined that the insurer's persistency discount rule may be unfairly discriminatory and in violation of Insurance Code section 1861.05(a). The rate analyst claimed that there should be no difference between an existing policyholder who receives a persistency discount and a new policyholder with verifiable existing insurance experience with a different insurer. In other words, the existing insurance experience should be 'portable' and considered by a different insurer ('portable persistency'). I concurred with this analysis."
"A review of the automobile rating factors reflected that persistency is the only rating factor that makes a distinction between existing and new policyholders which we felt was unfairly discriminatory. In addition there was a public policy component to our decision as well. If other companies were to adopt a portable persistency interpretation, it potentially could help reduce insurance premiums for the vast majority of drivers in [] California since roughly three out of four drivers in the State have existing automobile insurance. Consumers would be more inclined to shop for insurance if they knew that they would not lose their persistency discount by moving to another insurer."
"Following a number of discussions with this larger market share insurer, at our instruction it added portable persistency to its class plan. Its class plan was then approved in 1995."
"As the foregoing reflects, the concept of a portable persistency discount was initially the Department's idea. The Department subsequently approved the adopting of such a persistency discount in 1995."
[Emphases added.]
While the CDI's currently stated position on Proposition 17 might be characterized as equanimous, the CDI apparently had a much stronger opinion on this discount and even considered the existence of this discount to be good for California consumers.
[A copy of the court filed declaration can be found here.]
Wednesday, March 24, 2010 at 11:32AM Following up on his announcement in February, Dave Jones introduced Assembly Bill 2578 to pass into law prior approval rate requirements used by health insurers akin to prior approval requirements currently imposed upon the California property and casualty insurers. A copy of the most recent version of the bill can be found here.
It appears that the process toward adopting this bill may move quickly as it was announced today in the LA Times that the bill "sailed through" the Assembly's Health Committee (link here). Of course, the Consumer Watchdog organization has a blurb on this issue as well (link here).
Monday, February 22, 2010 at 11:47AM Obama revealed today his proposal for revamping the health care system. From a regulatory litigation standpoint, like Dave Jones' expected proposal for a bill in the California legislature, it calls for a review of premium rate increases, which could lead to more litigation and costs regarding rate increases. Obama's plan, however, calls for much more, such as providing subsidies to lower income people to buy insurance through state exchanges and restrict the ability of insures to deny coverage for pre-existing conditions. More details on the proposal can be found at the White House website (link here).
Tuesday, February 16, 2010 at 04:42PM In 2007 and 2009, CA Assembly member Dave Jones (now running for the office of Insurance Commissioner) introduced proposed legislation to extend the prior approval rate requirements of Proposition 103 (which currently only applies to property and casualty insurance) to health insurance -- essentially meaning that health insurers would have to first obtain regulatory approval over new rates that they seek to charge.
Though these prior attempts were stalled in committee, Jones recently stated that he would re-introduce this proposed legislation later this month. The third time may be the charm as there is good reason to believe that this proposed legislation will have more legs this time around given the current climate and public ire over the cost of health insurance (not to mention the recent criticism of Anthem's proposed rate increase).
In a recent statement in sfgate.com (article here), Jones explains:
"Under my legislation, which I plan to reintroduce later this month, prior approval would have to be obtained before health insurance rates could be increased. HMOs and health insurers would need to receive approval from the Department of Managed Health Care or the Department of Insurance for proposed rate increases. Rates requiring approval would include premiums, co-payments, coinsurance obligations and deductibles. That also means that if the insurer changes the product - like increasing the deductible or changing the benefits provided - the insurer would need to seek approval for the change. Increases would be denied if deemed excessive or unfair."
The changes that Jones proposes appear to be in line with the latest iteration of his 2007 bill (AB 1554, found here) and 2009 bill (AB 1218, found here) which tracks much of the language created by Proposition 103. Not mentioned in his statement, but included in his last bill, are provisions to allow intervention by members of the general public and the awarding of advocacy fees to those acting in the interest of consumers who make a substantial contribution to any final order.