The National Association of Health Underwriters (NAHU) is trying to draw voters’ attention to a consumer intervention provision in Proposition 45, a state health insurance rate review authority ballot measure.
Supporters are billing Proposition 45 as a referendum that would give the California state insurance commissioner the authority to deny or change health insurers’ applications for rate increases for individual and small-group medical coverage.
The consumer intervention provision, which would add Section 1861.17(c) to the California Insurance Code, would “allow “a proceeding pursuant to the authority of subdivision (a) of Section 1861.10.”
California Insurance Code Section 1861.10 gives consumers the ability to file suits against insurance companies in state courts. The insurance commission can pay advocacy and witness fees to witnesses who help consumers bring those legal auctions.
The California insurance commissioner has now the authority to make insurers justify their rate proposals and, in some cases, to correct what he determines to be errors, but not to change or reject rate change applications. Commissioners in some other states, such as Connecticut, do have the authority to reduce or reject proposed rates, but other states do not generally let consumers sue over rate increases.
Jamie Court, the president of the group Consumer Watchdog, wrote the measure. He has argued that letting consumers go to court to fight rate increases would help consumers overcome insurers’ political influence.
Dave Jones, the California insurance commissioner, and state consumer groups are supporting the measure. Jones is an elected official in his own right, not an appointed official.
The board of Covered California, California’s state-based Patient Protection and Affordable Care Act (PPACA) public exchange, is joining health insurers and insurance company groups in opposing the measure.
Janet Trautwein, the chief executive officer of NAHU, said in a statement that voters in California may not realize how different the Proposition 45 rate review system would be from the systems already in place in other states.
“Rather than lower health insurance premiums, Prop 45 has the potential to dramatically increase costs and reduce choice in the individual and small-employer markets,” Trautwein says in the statement. “Implementing Prop 45 would duplicate existing regulatory agencies in California and incentivize trial lawyers to challenge insurance rate increases.”