Assembly passes more insurance company oversight

HEALTH ACCESS UPDATE
Wednesday, June 2, 2010

CALIFORNIA ASSEMBLY PASSES KEY BILLS ON RATE REGULATION
AND NEW HEALTH INSURANCE INDUSTRY OVERSIGHT

* Bills Would Protect Consumers and Help Californians Benefit from Reform
* Rate Regulation, Rescission Oversight, Maternity Coverage Bills Pass Assembly
* Key Bills Supported by Consumer Groups but Opposed by Health Insurers like Anthem

ALERT: SB1163(Leno), sponsored by Health Access California, to disclose health plans’ rate methodology and rationale for denying coverage, is up for a vote Thursday morning.

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The California Assembly passed key bills yesterday to provide greater oversight of the insurance industry, many of which are supported by consumer groups and opposed by health insurance companies. These and other key bills, including a high-profile bill to institute rate review and approval of rate hikes by health insurers, are part of a broad effort to fulfill the promise of health reform in California.

After a federal debate on health reform spotlighted Anthem Blue Cross of California’s rate hikes. rescissions, and other abuses by the health insurance industry, the actions by the California Assembly seeks to provide new patient protections, from regulating rates to ensuring maternity care is covered in basic health plans. Predictably, these efforts to increase insurance company oversight and accountability are largely opposed by the insurance industry.

The measures passed, largely supported by consumer advocates, would provide more oversight on insurers to prevent the worst insurance company abuses. They would prevent rescission that yank away coverage when consumers need it, and denials for late premium payments that leave people uninsured and uninsurable. And they prevent insurers from raising rates without explanation or approval.

A broad list of pending legislation to “implement and improve” health reform is available on the Health Access California website. Bills that passed the Assembly yesterday include:

* RATE REGULATION: AB 2578 (Jones) would require approval by the Department of Managed Health Care or the Department of Insurance for an increase in the amount of premium, co-payment, coinsurance, deductible or other charges under a health plan. The need for these bills became more apparent with the spotlight on the huge increases of up to 39% by Anthem Blue Cross of California, and even larger increases by other insurers and in the market for small businesses. Even with very limited authority, the Department of Insurance was able to find significant errors. Proponents argue that insurers should not be allowed to raise rates without justification, and that rate regulatory oversight is especially needed in the interim between now and 2014, to prevent insurers from jacking up rates before health reform and its benefits are fully in force.

* ENSURING MATERNITY CARE: AB 1825 (De La Torre) would require most health plans to cover maternity services. A version of this bill has passed in previous years, only to be vetoed by the Governor. But health reform requires maternity coverage to be part of a basic benefits package by 2014, so the question is no longer whether we are implementing this coverage requirement, but when. Proponents argue that an early implementation would not just help California (and the state budget that often picks up maternity costs when private insurance doesn’t), but would help ease the market’s transition to health reform.

* REGULATING RESCISSIONS AND MEDICAL UNDERWRITING: AB 2470 (De La Torre) would establish standard information and health history questions used by health insurers on application forms, and required insurers to complete medical underwriting and review for accuracy before issuing an individual a health plan contract or policy. For the transition to a reformed market in 2014 where there would be no underwriting or denial for pre-existing conditions, this bill would actually help implement a part of federal health reform that bans “rescissions,” the controversial practice of the insurer yanking away coverage when premium-paying patients start to use care, under suspicion of inaccuracies in their initial application about their health status. Thousands of rescissions in California brought a national spotlight to this issue leading up to the health reform debate.

* PROVIDING PREMIUM GRACE PERIODS: AB 2110 (De La Torre) would extend the grace period for premium payments from 10 or 31 days up to 50 days for most plans regulated by the Department of Insurance. Now, consumers just missing the deadline to pay premiums, find they are cut off from coverage and become uninsured and uninsurable.

These and other bills are now halfway through the legislative process, having passed one of the two legislative houses. They next go to be heard in the Health Committee of the second legislative body, before the end of June.

A broad list of pending legislation to “implement and improve” health reform is available on the Health Access California website.

Health Access California promotes quality, affordable health care for all Californians.

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