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Lessons From The Cancellation Crisis

12:53 pm in Uncategorized by Consumer Watchdog

Jamie CourtAn analysis just released by California’s health insurance exchange, Covered California, offers the first real insight into the depth of the Obamacare cancellation crisis.

About 450,000 of the 900,000 cancelled California policyholders will see rate hikes, according to the analysis released by Covered California. That’s 50% of all cancelled Californians who will be paying more.

Most strikingly, half of those cancelled policyholders are getting policies that are little different from the ones cancelled, deemed by Covered California “comparable policies. ” In other words, half of cancelled California policyholders are paying more, in some cases a lot more, for policies that are worth no more under the Affordable Care Act. Covered California reports the other half – 225,000 — will pay more for better benefits since they had “Thinner Plan.”

Despite the ugly stats, the Covered California’s board of political appointees voted to block President Obama’s call for extending cancellations for another year. The Covered California contracts with health insurance companies, written at the insurers’ request, required them to cancel the 900,000 Californians. Thursday the board of political appointees refused to reverse course, arguing that would create more problems.

The happier headline Friday that 360,000 Californians have applied for coverage with California Covered is little surprise given that 900,000 policyholders have nowhere else to go because of its actions. And that was the point of the cancellations – drive the individual policyholders into Covered California’s pool.

The problem is that pool has premiums that are much higher than what they should be and doctor and hospital networks that are much too small. Cancelled policyholders would care less if they had comparable prices and comparable benefits. And that’s what reformers should be fixing, rather than defending as reasonable.

35 states have rate regulation but not California. So benefits and premiums will continue to be out of whack until voters set the insurance industry and its political allies straight through a ballot measure next November, which requires approval by the elected insurance commissioner for rate hikes and benefit changes.

Cancelled Plans

The Covered California analysis shows that 35% of cancelled policyholders will get subsidies for policies, so they will get rate relief under the Act. That doesn’t mean taxpayers aren’t paying too much for those policies, only that low income consumers are getting help.

The analysis, by one of the biggest boosters of the ACA, discredits an argument among other boosters that is troubling: why do we care that cancelled policyholders are losing ‘junk insurance.”

Our consumer group supported the ACA, and its research and education inspired its bans on junk insurance, preexisting condition limitations and medical underwriting. The fact is, however, that cancelled policies in California are, by and large, not junk. Their physician and hospital networks under old policies are far broader than under the Covered California plans. Of course, no one is watching, since our insurance commissioner has no power over prices.

Rate regulation is one answer, but until the 2014 election, when California voters can make that change, backers of the ACA also have to stop insisting its policies are always better, even if they cost more and cause doctor dislocation. That just won’t fly with a public that knows far better. Californians know when their doctors are not in the networks in the new plans and their premiums are higher.

If we want to save the ACA, then we better make it work. That includes acknowledging its flaws and trying to make them better.

In a state like California, without rate regulation and with much ACA support, it’s unthinkable that Covered California would buck the president and California Insurance Commissioner Dave Jones’ call for a reprieve on cancellations when its own numbers show 450,000 are paying more under the ACA.

It’s the continuation of a troubling logic that you are either for the ACA, and the relief it extends to 48 million uninsured, or against it. That type of reasoning will alienate the middle class, which is largely without subsidies and facing a real crisis in cost in states like California. These policyholders need relief too. And that means bucking the insurance industry, something its business partners at Covered California seem completely unwilling to do.

If the most ardent backers of the ACA don’t start to think like average citizens, there’s little reason to believe the vital center and muddled middle will continue to support the ACA. It’s time to wake up and smell the rate hikes and insurance company shenanigans for what they are – wrong, plain and simple. Then we can work together on fixing them.


Posted by Jamie Court, author of The Progressive’s Guide to Raising Hell and President of Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

A California-Style Fix for Obamacare’s Runaway Premiums

12:28 pm in Uncategorized by Consumer Watchdog

 photo Harvey_3_zps8d2a495e.jpgRegulation of insurance companies, introduced by Proposition 103, could repair a loophole in the Affordable Care Act.

“We didn’t do a good enough job in terms of how we crafted the law,” an apologetic President Obama said this month, shortly after millions of Americans got notices from their health insurance companies that their current policies were going to be canceled because the policies didn’t comply with the minimum standards of the Affordable Care Act. Worse, the federal website where people were supposed to be able to buy replacement coverage was still barely functional.

Last week, confronting a perfect storm of policy snafus and public indignation, the president announced that he would allow health insurers to renew current policies for an additional year. But he left the final decision to the companies or state authorities, who promptly warned that the result would be higher premiums.

That, not the cancellations or the HealthCare.gov website, is the fundamental problem with the Affordable Care Act: The law places no limits on the price insurance companies can charge for the coverage we are required to buy. This was no drafting error. In 2010, neither Congress nor the White House wanted to risk the opposition of the powerful insurance industry.

Thus it’s no surprise that the insurers are now jacking up premiums and copays while limiting prescription drug benefits and dumping doctors and hospitals from their networks.

California lawmakers made a similar egregious error in 1984 when they passed a law requiring residents to buy automobile insurance but failed to regulate prices. So, of course, the insurance companies took advantage, imposing double- or triple-digit premium increases. A voter revolt ensued.

And therein lies the solution to the current healthcare law debacle.

Twenty-five years ago this month, angry California voters passed a ballot measure to stringently control automobile, as well as home and business, insurance premiums. An unprecedented $63-million campaign by the insurance industry could not stop the grass-roots rebellion. In a historic upset, Proposition 103 swept away decades of deregulation, discriminatory practices and barriers to competition in the insurance marketplace.

Insurance companies were required to open their books and publicly justify rate increases before they took effect. To guarantee that industry lawyers and lobbyists would not derail the new law, the measure made the insurance commissioner an elected post and further empowered consumers to hold insurance companies directly accountable if they violated the law.

The voters also enacted critical protections against any last-minute chicanery by insurance companies before implementation of their reforms. For example, to prevent opportunistic price-gouging before Proposition 103 went into effect, the law imposed a one-year postelection freeze on rate increases, plus a 20% across-the-board premium rollback. It also barred insurance companies from arbitrarily canceling or refusing to renew auto policies. These safeguards, missing from the Affordable Care Act, made the transition from deregulation to price protections a smooth one. And it netted Californians $1.2 billion in refunds for unjustified price increases.

A study issued last week by the Washington-based Consumer Federation of America quantifies Proposition 103′s pocketbook impact. It found that California is the only state in the nation where the average auto insurance premium is lower today than it was in 1989. Once the second-most expensive state for auto insurance in the nation, California now ranks 30th, according to the report. The federation also found that California motorists have saved more than $100 billion since 1989, an average annual savings of more than $8,000 for every household in the state. The report concludes that under Proposition 103, “California has provided auto insurance consumers the most effective and protective regulatory system” in the United States.

Equally important is the initiative’s democratic impact. Proposition 103′s mandate for fairness in insurance pricing practices has become ingrained in California’s public policy. The measure built a strong political base by giving both middle-class and low-income voters an equal stake in its reforms. And its success has enhanced public confidence in state government and in regulation.

That’s a stark contrast to Obamacare, at least so far. The Affordable Care Act offers subsidies to low-income consumers — a valuable investment by taxpayers in America’s human infrastructure — but the absence of price protections has deeply disturbed a middle class abandoned by Washington after the 2008 economic collapse and still struggling to pay the bills.

Proposition 103 did not originally apply to health insurance, unfortunately. To remedy that, Consumer Watchdog has qualified an initiative for the November 2014 ballot that would place health insurance companies doing business in California under Proposition 103′s regulatory controls. The nation will be watching as California voters once again lead the way in insurance reform, this time with a state-based strategy to close the loophole in the Affordable Care Act.

Harvey Rosenfield, founder of Consumer Watchdog, is the author of Proposition 103. Originally published in the Los Angeles Times on Tuesday, November 19, 2013. Online version can be viewed here.

Health Law Doesn’t Protect Californians From Rate Increases

2:47 pm in Uncategorized by Consumer Watchdog

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Reporters largely missed the point of a Commonwealth Fund study released this week, that looked at consumer savings under Obamacare’s 80-20 rule, the rule making insurance companies spend at least 80% of your premiums on health care, not overhead.

The authors started with a fact we already knew — that health insurance companies had to pay $1.1 billion in rebates for missing the MLR requirement in 2011 — and that big shiny number distracted the news media. But the authors zeroed in on a much more important fact. Insurance companies successfully reduced administrative costs by $1.184 billion in 2011, but they used those savings to increase profits instead of passing them on to consumers.

Clearly the 80-20 rule isn’t working to contain profits and hold down premiums, especially in states that don’t have tough regulation of insurance premiums.

California Insurance Commissioner Dave Jones launched an audit this week of the state’s largest health insurers to determine if consumers paid too much when insurers were actually saving money and boosting profits. The Commonwealth study found that in California, insurance companies increased profits for individual plans by $88 per member or about $90 million, even though administrative costs went down and every major insurance company imposed rate increases.

These results are more evidence that states need the ability to say no to rate manipulation. Otherwise, insurance companies will keep premiums artificially high to make sure profit numbers stay high too. As we warned HHS Secretary Sebelius more than two years ago:

“In the same way that a Hollywood agent who gets a 20 percent cut of an actor’s salary has an incentive to seek the highest salary, insurers will have incentive to increase health care costs and raise premiums so that their 15 percent or 20 percent cut is a larger dollar amount.”

As Jones said when announcing the audit:

“I have long pushed for the authority to reject excessive health insurance rate increases and this study provides further evidence of why this change in the law is long overdue in California. Health insurers and HMOs continue to impose double-digit premium increases each year and are making larger profits when selling to individuals and families even during these tough economic times.”

Californians will finally have the chance to stop them, by voting at the next ballot on an initiative measure to require health insurance companies to publicly justify rate increases and get approval before they take effect. Learn more at justifyrates.org
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Posted by Carmen Balber, Washington DC Director for Consumer Watchdog and Consumer Watchdog Campaign

Independence Day Reprieve for Consumers Enrolled in Blue Shield Policies To Be Closed This Week

5:24 pm in Uncategorized by Consumer Watchdog

Insurance

Commissioner Dave Jones Sides With Consumers, Echoes Concerns Raised by Consumer Watchdog in Lawsuit Over the So-Called “Death Spiral”

Santa Monica, CA – Consumer Watchdog praised Insurance Commissioner Dave Jones’ announcement today opposing Blue Shield’s plan to close 23 health insurance policies, and echoing concerns raised by Consumer Watchdog in a recently-filed class action lawsuit.

Consumer Watchdog said, however, that as many as 100,000 Californians are still trapped in closed or lower-benefit health plans following policy closures carried out by Blue Shield’s affiliate regulated by the Department of Managed Health Care in 2010.

“Blue Shield is on notice that the company’s plan to close health insurance policies fails to protect consumers as the law requires,” said Jerry Flanagan, staff attorney for Consumer Watchdog. “If Blue Shield decides to go forward with the policy closures, we look forward to working with the company to implement a consumer-friendly plan. We also hope that Blue Shield will ensure that consumers affected by the 2010 policy closures will finally benefit from the protections mandated by law.”

The lawsuit filed by Consumer Watchdog and Whatley Kallas, LLC alleges that Blue Shield is illegally gaming the health insurance system by alternately closing older policies and opening new ones in order to push older, sicker consumers who are more expensive to insure into lower benefit, higher deductible coverage that requires consumers to pay more out of pocket.

The lawsuit seeks to stop Blue Shield from shoving its policyholders into what is known as a “Death Spiral”–the industry term for what happens when a health insurer “closes” certain insurance policies to new customers, and later raises rates to those remaining in the closed policy until those enrollees can no longer afford coverage. Since consumers with preexisting conditions cannot switch to a comparable or better policy, consumers trapped in the closed policies must either accept greatly inferior coverage or face bigger and bigger premium increases.

Download the lawsuit filed in San Francisco Superior Court here

According to legislative records, it was Blue Shield’s own past business practices, resulting in Death Spirals for consumers, that spurred the Legislature to adopt the same 1993 law that Consumer Watchdog and Whatley Kallas, LLC now allege the company has violated.

The policy closures are taking place among certain insurance plans in the individual market. California law requires that when health insurers close a policy the insurer must either offer consumers new comparable coverage, or minimize rate increases on the closed policies.

Two regulatory agencies – the California Department of Managed Health Care (“DMHC”) and the California Department of Insurance (“CDI”) – oversee different segments of Blue Shield’s insurance business. In the lawsuit, Blue Shield is accused of illegally closing eight policies regulated by the DMHC in 2010, and announcing it would close 23 policies regulated by the CDI on July 2, 2012 without offering consumers comparable policies or limiting rate increases as required by law.

Consumer Watchdog and Whatley Kallas, LLC settled a similar class action lawsuit last year targeting Blue Cross of California’s illegal Death Spiral practices. Read more about that lawsuit and settlement here. Under the terms of that settlement, Blue Cross must both offer consumers in the closed policies access to comparable coverage and limit rate increases in the closed policies if consumers choose to remain enrolled in the older, closed policy.

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Consumer Watchdog is a nonpartisan consumer advocacy organization with offices in Washington, D.C. and Santa Monica, CA. Find us on the web at: http://www.ConsumerWatchdog.org

WhatleyKallas has earned a national reputation-based on trust, respect, demonstrated commitment and tangible results-in connection with its representation of healthcare providers and members of the organized medicine community. The firm’s lawyers have negotiated settlements with most of the major health insurers in the country on behalf of hundreds of thousands of consumers, physicians and medical associations that resulted in monetary relief and revolutionary practice changes valued in the billions of dollars. These settlements fundamentally changed the way managed care companies do business. The lawyers of WhatleyKallas have been repeatedly recognized in legal publications, such as “The National Law Journal” and “American Lawyer”, by their peers and by leaders of organized medicine for our work in the healthcare field. For more information, go to: http://www.whatleykallas.com/

Mandatory Health Insurance Needs Rate Regulation As Next Step To Make Coverage Affordable

2:28 pm in Uncategorized by Consumer Watchdog

Decision Upholds Key Protections Requiring Insurance Companies To Sell and Price Insurance Regardless of Health Status

Supreme Court after HCR decision

Today’s decision by the United States Supreme Court to uphold the Affordable Care Act and its mandate that individuals purchase health insurance makes rate regulation the next essential phase of health reform, said Consumer Watchdog today.

Consumer Watchdog praised the court for requiring health insurance companies to sell to people regardless of pre-existing conditions, eliminating medical underwriting, and barring practices like rescission that made health insurance disappear when patients needed it most. These reforms will expand Americans’ access to health insurance and help policyholders get the coverage they are promised, said Consumer Watchdog.

“Upholding the individual mandate makes rate regulation the next essential phase of health reform and we hope the President will join in helping us to keep premiums low now that people are going to be taxed for not having health insurance,” said Jamie Court, president of Consumer Watchdog. “We must ensure health insurance premiums are affordable if Americans are going to have to buy it. The future of health care reform depends on regulating premiums and making health insurance more transparent and accountable.”

Consumer Watchdog’s campaign affiliate, Consumer Watchdog Campaign, is sponsoring a ballot initiative to force health insurance companies to justify rate increases and get approval before they take effect. The ballot initiative is awaiting certification for the ballot. More on the ballot measure at: http://www.JustifyRates.org.

A Consumer Watchdog report finds that strong rate regulation is necessary to hold down costs and keep insurance affordable under health reform. The report examined Massachusetts where rate regulation has begun to successfully hold down premiums after the state’s individual mandate, which was the model for federal reform, failed to control costs.

Download the report “Health Reform and Insurance Regulation: Can’t Have One Without The Other”

Obama’s dare to SCOTUS could screw patients and help insurers

4:27 pm in Uncategorized by Consumer Watchdog

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In a remarkable act of either stupidity or brinksmanship, the Obama Administration challenged the US Supreme Court to either keep the federal individual mandate to buy health insurance or throw out with it some of the most important consumer protections in the federal health care overhaul.

The Justice Department argues in a brief to SCOTUS that if the mandate is unconstitutional, then insurance companies cannot be forced to sell health insurance to people regardless of their preexisting conditions or to price their policies based on factors other than a patient’s medical condition.

In other words, give us mandatory health insurance or take from sick patients the right to have access to insurance at an affordable price.

WTF? Has the White House lost its mind?

New York has a system with NO mandatory health insurance, but the very take-all-comers provision and community rating pricing, which excludes price gouging based on illness, that the Justice Department says cannot work without the mandate.Obama advocated for such a system while running for president and distinguishing himself from Hillary Clinton. Now, according to his Justice Department, it’s just not possible?

New York may have high premiums, but so does Massachusetts, which has mandatory health insurance. Both states have recently adopted premium regulation to deal with reining in premiums. Consumer Watchdog’s study earlier this year found premium regulation to be the essential component for health reform to work, not mandatory insurance.

Obama’s attempt to force the hands of a Supreme Court that couldn’t even be shamed out of throwing the 2000 election to George W. Bush seems to be more than legal sophistry. The President seems to have said to himself so many times that mandatory health insurance is necessary for any pro-consumer reform that his Justice Department believed it.

Lower courts have ruled the mandatory purchase provision — which is wildly unpopular with public, unfair without premium regulation and possibly unconstitutional — could be struck from the federal law without losing the pro-consumer provisions. Now the Justice Department just gave the Supreme Court the blade it needed to gut the prohibitions against insurance companies refusing to sell insurance to people who need it most. Read the rest of this entry →

Time For A 1988-Style Voter Revolt?

4:52 pm in Uncategorized by Consumer Watchdog

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The San Francisco Chronicle reported this morning on the front page about the landmark insurance reform we expect to be spending the next fifteen months working for.
Insurance companies, the legislature and recent court rulings have all turned against consumers, much like they had in 1988, when California voters struck back with the toughest insurance reform in America: Proposition 103.
By 2014, all of us will be required to buy health insurance or face tax penalties. The problem is that health insurance companies can charge whatever they like and raise premiums at will in California. This is the same scenario that drivers faced in 1988 when mandatory auto insurance laws forced drivers to pay for policies many couldn’t afford. Voters then required auto insurers to pay drivers a 20% refund and to get permission before they ever raised rates again.
Just like in 1988, insurance stalwarts in the statehouse are now holding insurance premium regulation hostage. The companies have given the politicians millions so they can make billions overcharging you. And, as in 1988, the California Supreme Court has issued several rulings taking away the right of policyholders to hold insurance companies accountable.
If we go to the ballot with a 1988-style 20% rollback in health insurance premiums, will you be with us?
Our “Proposition 103 Part Two” ballot measure will have to be filed by November 2011 in order to begin signature collection so it gets on the ballot for November 2012.
The main provisions of the ballot measure are as follows:
1- A 20% rate rollback in health insurance rates to reverse five years of unwarranted double-digit price gouging;
2- Require health insurance companies to seek permission from the elected insurance commissioner before raising rates, as auto insurance companies must, and application of other Prop 103 protections to health insurance companies;
3- Prohibit all insurance companies from raising your rates or refusing to renew you because of your credit score, claims or insurance history;
4- Allow consumers to join a non-profit public health plan administered by CALPERS instead of having to buy insurance from private insurance companies;
5- Correct court rulings that have misinterpreted the law to benefit the insurance industry;
6- Create a “three strikes and you’re out of California” law for insurance companies that repeatedly violate the state’s consumer protection laws
7- Prohibit health insurance companies from forcing you to sign arbitration agreements as a condition of enrollment.

We want to go to the ballot in November 2012. Will you be with us? Click here to sign up!
Together we can move health care reform forward in California and America.
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Jamie Court is president of Consumer Watchdog and author of The Progressive’s Guide To Raising Hell.

Insurance Industry’s Two-Faced Battle Against Patients

6:50 pm in Uncategorized by Consumer Watchdog

Photobucket Health insurance companies apparently have no problem taking opposite sides of an issue when it serves their bottom line. When it comes to California law, they hate regulation and will spend any amount of money and credibility to kill it. But when it comes to protecting the profits of insurance brokers at the expense of consumers, insurance companies say (approvingly) that effective state regulation will protect consumers from premium increases. Both positions are public record, but health insurance companies apparently figured no one would ever notice.

The California battle is highly public. The state is the biggest health insurance market in the nation and one of the least-regulated. So it’s no wonder tht the insurance industry is fighting a tooth-and-nail battle against state regulation that would protect consumers from premium increases of up to 86% in 12 months–as Blue Shield tried to impose in the last year. The insurance companies have clubbed doctors into submission, threatening to cut their reimbursement if decent regulation starts to squeeze record health insurance profits. They have also poured money into political contributions to key legislators, according to an Associated Press story this week.

The bill, AB 52 by Assemblyman Mike Feuer, has passed the state Assembly and is up for a vote today (Wednesday) in a key state Senate committee. Here’s a safe bet: Even if it passes and goes to the full Senate, insurers will twist every arm and make every threat to get the bill killed–or more likely, crippled by hostile amendments that would hogtie the state Insurance Commissioner.

The other side of the insurance company mouth is buried in the proceedings of the National Association of Insurance Commissioners, where only geeks go to read. Right now the organization is under pressure to back a legislative proposal in Congress that would kill a key consumer protection in the federal health reform. The bill, HR 1206 by Michigan Republican Mike Rogers, would allow insurance companies to pay brokers and agents without counting the payments as an overhead expense. This would trash the reform requirements that insurance companies spend more on health care, holding overhead and profits to 15% or 20% of insurance premiums. If they don’t have to count broker pay as overhead, health insurers wouldn’t have to lift a finger to become more efficient.

Of course, we consumer advocates have argued that if the Rogers bill passes, insurance companies will have a free pass to raise premiums.

The health insurance lobby’s response? Oh, that won’t happen because consumers are well-protected by state insurance regulations!

From a June 2 letter (see last page) by America’s Health Insurance Plans to the NAIC:

“Finally, we wish to comment on a concern we have heard that deserves a response. One commentator has expressed the concern, and assumption, that if commissions are removed from the MLR calculation, then insurers will only increase their premiums – leading to great harm to consumers. We believe this flawed assumption fails to recognize the standard of rate review prevalent in the states. Exempting commissions from the MLR calculation does not pull them from the rates, and certainly does not stimulate insurers to inflate their rates. And states are increasingly focused on assuring value for consumers in their rate review, in accordance with the ACA, making such an assertion even more unlikely.”

If states want to “assure value” in health insurance, they certainly do have to review and regulate rates, and that includes the power to approve or reject rates before they go into effect. Such prior approval is now “prevalent” in the majority of states–though not in California.

When a corporate lobby is as powerful as the health insurance industry’s, it apparently doesn’t have to worry about being consistent.

I hope state legislators weighing the California bill have a grip on how two-faced the industry deliberately is. At least the industry has admitted that regulation is the only barrier between consumers and the next flood of premium increases.
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Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

Health Insurance Brokers Got 2800% Pay Increase In Last Decade–And Want More

8:06 pm in Uncategorized by Consumer Watchdog

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Health insurance companies aren't the only ones that raked in the dough as insurance premiums rose 138% over the last decade. Health insurance brokers, who get their pay as sales commissions from insurance companies, made out like bandits, too. A recent California Department of Insurance survey of four of the five top insurers in the state found that aggregate broker income rose from from $5.8 million in 2000 to $168 million in 2010–a 2800% increase. Some of that is growth of the broker industry as insurance became a for-profit product, but a lot of it is also broker pay rising along with premiums.

Yet now the brokers' lobby is crying poverty, demanding legislation to exempt their commissions from new health reform rules intended to trim health insurance administrative costs–including broker pay. Go tell the brokers' sob story to the bus driver who's been out of work for 18 months and whose family can't even afford health insurance.

The brokers are also pressuring that the National Association of Insurance Commissioners to endorse this pay-protection legislation, even though the cost to consumers and taxpayers would be in the billions of dollars. Insurance commissioners with cooler heads, including California commissioner Dave Jones, got the NAIC to hold off and study the consequences first. It was also Jones who ordered up the survey showing the explosion in broker pay in California.

An NAIC committee did do a study–and found that consumers would lose more than a billion dollars in rebates if the brokers got their way. Plus insurance companies would likely raise premiums–with an ultimate cost to consumers and taxpayers in the billions. (See Consumer Watchdog's letter to  NAIC here) All for an industry that has gotten a free ride for years, with percentage commissions rising along with insurance premiums. Yet it refused to incorporate the information on California broker pay.

The committee, with only Jones dissenting, dutifully passed along its study to the whole NAIC this week.

Now it's up to the 50-plus insurance commissioners to decide whether they'll endorse some tortured compromise to give the brokers paycheck protection (sometimes 2800% just isn't enough) and stick consumers with the cost. The simpler and fairer alternative would be to not endorse anything, and let the brokers sell the bill on on their own.

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Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

Calif. Legislators: Choice Is Between Insurance Industry And Rest Of Us

3:20 pm in Uncategorized by Consumer Watchdog

PhotobucketLos Angeles Times business columnist Mike Hiltzik offers a stark choice to state legislators in his Wednesday column. What'll it be, has asks: the millions of dollars that the insurance industry pours into your campaigns and treasure chests, or the millions of Californians battered by health premiums that kill the family budget or company benefits account? Plus the 8.2 million Californians with no health insurance at all?
The choice Hiltzik lays out is between legislation (AB52 by Mike Feuer) that would finally give the state insurance commissioner the power to deny or modify unreasonable health insurance rate increases before they go into effect, and the exaggerated or outright false charges being slung by the industry. That opposition campaign is just a  cover for the real issue: the power of industry campaign money and its lobbying force.

From 2007 through this year, for example, Anthem Blue Cross has made campaign contributions totaling nearly $5 million to candidates, parties and political action committees, according to state records. Blue Shield has contributed more than $2.3 million in the same period…..
Across the country, prior approval of healthcare rates is becoming more the norm, now effective in 34 states and the District of Columbia for at least some policies, according to the Kaiser Family Foundation. The procedure closes a gap left by federal healthcare reform that leaves rate regulation to the states and provides only loosely for premium review. Once again, AB 52 provides state legislators with a chance to declare whom they really represent — their voters or their campaign donors.

The insurance industry is going after legislators that it has contributed to, or who otherwise look susceptible. That helps explain why the legislation barely squeaked through a key committee vote last week after two Democrats voted against it.
The final vote in the Assembly has to come by Friday. Lobbyists will be swarming the halls outside the chamber, intending to ride the last-minute chaos of speed-voting to kill the rate regulation bill. Among the lies the lobbyists will be forcing down legislators' throats is that regulation will somehow raise, not lower, insurance premiums. Again, Hiltzik nails it:


Last year both Aetna and Anthem backed away from huge rate hikes after independent actuaries found glaring mathematical errors in their rate filings.
A study in 2009 by the New York state insurance department found that these sorts of errors, and worse, were rife under that state's then-deregulated system, which resembled California's toothless regime. New York found that insurers routinely under-reported such errors and refunded (retroactively) only about a third of the ill-gotten excess to policyholders. The study helped goad lawmakers there into reinstating prior approval after about 15 years without it.
As it happens, California's health insurance lobby has tried to use New York's experience as Exhibit A for the case against prior approval. The association contends that five of the 10 states with the highest individual healthcare premiums are subject to prior approval, with New York leading the list. There's a problem with this claim, however: New York's prior-approval rules went into effect only this year. In other words, New York's high individual premiums are the result, if anything, of the absence of prior approval.
When I asked a CAHP spokeswoman where the figures came from, she said they conducted "some unique research." That's one way of putting it.

Even if AB52 passes the Assembly, it still has to take the same tortured path through the state Senate. The outrageous rate-spiking by insurance companies last year and this ought to be the final shove for honest health insurance regulation in California, just like the state has for auto and homeowner insurance. But in today's legislature, nothing is sure. To take action with a message to your legislator, click here.
If you've read this far and want to know more,  Read Consumer Watchdog’s new report on how rate regulation works to hold down premiums. And see what Sen. Dianne Feinstein says about the need for regulation.
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Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.