All the commotion about rate increases in the Golden State has finally come to a head.
Recently, California insurance commissioner Steve Poizner hired independent actuaries to determine if health plans’ requested rate increases were too high. But now, under a bill expected to get approved by Gov. Arnold Schwarzenegger, insurance companies will have to hire those actuaries – and pay for them – on their own.
The bill, sponsored by state Sen. Mark Leno, requires any rate increases that insurance companies file with the state to be “actuarially sound.” Furthermore, the plan must pay for the analysis, which will note whether the increase is reasonable or unreasonable, as defined by the Patient Protection and Affordable Care Act (PPACA). Unreasonable rates may be allowed if the analysis gives a reason for the cost.
The legislation was pushed into consideration as a result of health care reform passing. California’s health rate hikes were involved in providing the final momentum for passing the PPACA. California plans must spend at least 70 percent of their premiums on health care. Anthem Health Care was denied a proposed maximum 39 percent and average 25 percent rate increase for individual plans using that requirement, an effort that piqued the interest of the Obama administration.