Bill calling for state regulation of health insurance rates clears key hurdle

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A hotly contested bill that would allow state insurance regulators to reject excessive health insurer rate hikes cleared a legislative hurdle Wednesday, but it faces amendments that could weaken its consumer protections.

The measure, Assembly Bill 52, passed through the state Senate Health Committee despite opposition from the insurance industry and trade groups for hospitals and doctors.

The Health Committee’s chairman, Sen. Ed Hernandez (D-Baldwin Park), voted for the bill but said he expected amendments as its heads to the Senate’s Appropriations Committee next month.

Hernandez said he wants, among other things, to “de-politicize” the decision-making process of regulating health insurance rates. Critics of the bill have complained about giving the state’s elected insurance commissioner and a second regulator, the Department of Managed Health Care, too much authority to halt rate increases.

One idea under consideration would allow insurers to appeal rejections to a panel of independent actuaries, according to healthcare experts in Sacramento.

On Wednesday, consumer and small business groups applauded the committee for advancing the bill by state Assemblyman Mike Feuer (D-Los Angeles). They were joined by Insurance Commissioner Dave Jones.

Jones criticized what he called “poison pill” amendments he said would weaken the law, saying, “The core objective is to make sure the insurance commissioner and the Department of Managed Health Care have the authority to reject excessive rate hikes. That’s the lens through which any amendments need to be evaluated.”

An insurance industry spokesman said that insurers still opposed the bill, saying it ignores the underlying causes of rising premiums -– the ever-increasing cost of healthcare.

“AB 52 remains a misguided effort that will limit patients’ access to care and their health coverage choices,” said Patrick Johnston, president of the California Assn. of Health Plans. “Nothing has changed.”

-- Duke Helfand