Prior Approval of Health Insurance Premium Increases Legislation Passes Committee--First Time in California History

[courtesy of California Progress Report]

By Frank D. Russo

Yesterday evening, the Assembly Health Committee on a 10-5 vote passed AB 1554 by Assemblymember Dave Jones regulating health insurance premiums. The bill requires that prior approval be obtained before health insurance rates can be increased. According to the author, this is the first time that legislation on this topic has passed a California legislative committee.

Voting for the bill were Assemblymembers Karen Bass, Patty Berg, Hector De La Torre, Kevin de Leon, Loni Hancock, Mary Hayashi, Ed Hernandez, Dave Jones, Sally Lieber, and Fiona Ma, all Democrats. Those voting against the measure were Assemblymembers Alan Nakanishi, Bill Emmerson, Ted Gaines, Bob Huff and Audra Strickland, all Republicans. Not voting were Democratic Assemblymembers Mary Salas and Mervyn Dymally.

Rates requiring approval include premiums, co-payments, coinsurance obligations and deductibles. HMOs and health insurers would need to receive approval from the California Department of Managed Health Care (DMHC) or the Department of Insurance (DOI) for increases.

Proposed rate increases would be denied if they were deemed excessive or unfair. Any proposed rate that is not challenged by a consumer within 45 days of it being posted on the Department website and not acted on by the Department on its own discretion within 60 days would be deemed approved. This rate regulation would begin January 1, 2009.