Proposed health insurance rate regulation initiative submitted
The consumer group that brought regulation of auto insurance rates to California now wants to do the same for healthcare coverage.
On Wednesday, the Santa Monica advocacy group Consumer Watchdog submitted to the state attorney general's office a proposed initiative that would require insurance companies, health maintenance organizations and preferred-provider organizations to get prior approvals from the California Department of Insurance for proposed rate hikes.
The petition, once cleared for circulation, would need about 505,000 signatures from registered voters to appear on the statewide ballot in November 2012. The initiative, if it qualifies for the ballot, is expected to garner fierce opposition from insurance and related healthcare providers. Backers said they are prepared to fight a one-sided campaign with an industry that could easily spend $100 million.
The health insurance measure would be an update of Proposition 103, an initiative approved by California voters in 1988 that made auto and homeowner insurance the most highly regulated in the nation.
"This applies rate regulation, prior approval (of rates), transparency provisions and refund authority to health insurance," said Jamie Court, president of Consumer Watchdog.
Also under the draft initiative, health insurance executives could be prosecuted for perjury if they provide untruthful information about the need for higher rates for individual and small-group health insurance coverage.
"It's a big hammer to make sure that if rates have to go up, the information is solid," Court said.
The Consumer Watchdog initiative is similar to bills in the state Legislature that have failed to win passage in the last five years.
State Insurance Commissioner Dave Jones authored one of them as a member of the state Assembly two years ago and supported another version that stalled this year.
Jones continues to support the concept of regulating health insurance rates, a spokesman said. But he is still reviewing the Consumer Watchdog ballot initiative.
Representatives of the health insurance industry called the proposed initiative "seriously flawed." It also faces opposition from employers, health plans, doctors hospitals and medical groups.
"If this proposal even makes the ballot, it will be defeated," said Charles Bacchi, executive vice president of the California Assn. of Health Plans.
-- Marc Lifsher
Photo: Emergency room personnel at UC Davis Medical Center in Sacramento. Credit: Rich Pedroncelli /Associated Press