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Life Health > Health Insurance > Health Insurance

Insurers fight California rate measure

By Alison Vekshin

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(Bloomberg) — WellPoint Inc. (NYSE:WLP) is helping to pay for a fight against a ballot initiative that could give California insurance regulators the power to reject increases in health insurance premiums.

WellPoint accounted for $12.5 million of the $13.4 million that initiative opponents had contributed as of April 2, and its Anthem Blue Cross unit had contributed $270,000, according to MapLight, a research organization.

The anti-initiative total included $270,000 from Kaiser Foundation Health Plan Inc.; $180,000 from Blue Shield of California; $135,000 from Health Net Inc. (NYSE:HNT); $30,000 from a unit of UnitedHealth Group Inc. (NYSE:UNH); and $30,000 from the California Association of Health Plans.

Measure supporters have raised $425,521, with $250,000 coming from Consumer Watchdog; $105,000 coming from the Committee for Corporate Accountability and Consumer Protection; and $50,000 coming from the California Nurses Association.

Voters won’t be voting on the measure until November.

“It is unusual to have such substantial donations this early in the election process,” said Daniel G. Newman, MapLight’s president. “It shows what’s at stake financially for those insurers and also what’s at stake financially for health- insurance consumers.”

Measures with similar funding disparities have failed in recent years. In 2012, California voters rejected a proposal to raise cigarette taxes by $1 to fund cancer research that received $12.9 million in support from the American Cancer Society and other groups, while the opposition gave $47.8 million, led by Altria Group Inc. and Reynolds American Inc., according to MapLight data.

The financial advantage will give the measure’s opponents the ability to run more television and radio advertisements and send out more mailers to sway voters, Newman said.

“This battle will be a David and Goliath fight,” said Carmen Balber, Consumer Watchdog’s executive director. “California voters are smart, and it raises red flags to the public when an industry spends overwhelmingly in opposition to something.”

The AMA opposes the measure

The change is being sought as the Obama administration implements the 2010 Patient Protection and Affordable Care Act (PPACA). As of March 31, more than 3 million Californians enrolled in commercial “qualified health plans” (QHPs) through the exchange, or used the exchange to enroll in Medi-Cal, the state’s health coverage for the poor, according to Covered California.

Premiums for family medical coverage in California have increased by 185 percent since 2002, with monthly premiums for single coverage averaging $572 in 2013, compared with $490 nationally, according to the California HealthCare Foundation.

Insurers “want to continue to protect their excessive profits and their ability to set rates as they see fit,” said Dave Jones, California’s insurance commissioner, an initiative supporter.

The ballot initiative would require insurers to justify proposed rate changes and give the state insurance commissioner authority to reject increases.

The measure would apply to every individual and small-group policy.

Regulators in about 35 states have the authority to approve or deny rate changes, according to the National Association of Insurance Commissioners.

In 1988, California voters approved a ballot measure that gave the state insurance department the power to regulate rate changes for auto, property and casualty insurance.

Darrel Ng, a spokesman for WellPoint and Anthem, and Amy Thoma, a spokeswoman for Kaiser, declined to comment on the anti-initiative spending. They referred questions to Robin Swanson, a spokeswoman for Californians Against Higher Health Care Costs.

“This initiative creates a costly new bureaucracy that will be headed by a single elected politician who then has broad new powers over health care, including treatment options health insurance covers,” Swanson said. “Treatment decisions should be made by doctors and patients, not someone with a political agenda.”

The California Medical Association is part of the group that opposes the initiative.

“California just launched a new independent commission empowered to negotiate health-plan benefits,” association President Richard Thorp said in an e-mailed statement, referring to the Covered California public health insurance exchange. “We should allow them to do their job instead of passing a law that hands authority over health-care coverage to a politician who can take campaign contributions from special interests.”

Jones said Covered California doesn’t oversee premium changes.

“That’s simply not true and an intentional misstatement of how the law works,” he said. “Covered California is governed by a board which negotiates rates. There’s no regulation of rates by Covered California or any committee of Covered California.” 

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