Last Friday, September 7th, Governor Jerry Brown signed AB 595 by Assemblymember Jim Wood which institutes stronger state oversight over health plan mergers, in a big win for patients and the public interest. With concerns about rising premiums, fewer choices, and competition in health insurance, Governor Brown is right to protect consumers with stronger oversight of health plan mergers. Health plan mergers need to be evaluated to ensure that they are in the interest of patients and public, not just shareholders and executives.
In California, the top five insurers control over 90% of the market. With health insurance markets already highly consolidated, mergers are likely to result in fewer choices and higher prices for the millions of California consumers enrolled in private coverage. Private insurance premiums and out-of-pocket spending are already high and projected to grow. Health insurance premiums for family coverage have seen a cumulative 216% increase since 2002, compared to a 37% increase in overall prices. Current law gives regulators some oversight over insurer mergers, but they are insufficient to fully protect consumers.
AB 595 will strengthen the Department of Managed Health Care’s (DMHC) oversight over health plan mergers by requiring health plans seeking to merge to get approval from DMHC, allowing DMHC to reject mergers that negatively impact competition, or to impose conditions to protect patients and the public interest, and increases transparency and public participation in the merger review process, including public hearings for mega-mergers.
Bigger is not necessarily better for consumers, and the state must be able to scrutinize mergers and ensure they are actually good for patients and the public interest. AB 595 will protect the millions of Californians who could be negatively affected when a health plan seeks even more market power.
AB 595 is one of nine bills that are part of the Care4All California package on the Governor’s desk, that take key steps to make our health system more universal, accountable, and affordable. AB 595 will go into effect on January 1, 2019.