On January 1st, Californians will have some additional patient protections against insurance company abuses, as a result of laws passed in 2010 that build off the new federal health law. These new California laws will provide new oversight on insurers, from providing new access and affordability for children with pre-existing conditions, and new scrutiny on health insurance rate hikes.
These new patient protection laws provide new benefits and options for Californians consumers, and place greater oversight over insurers to prevent the worst abuses of the industry, as California adapts to the new federal health law. California is on its way to fulfilling the promise of the new federal law, by both implementating and improving upon it.
In particular, the California Department of Managed Health Care (DMHC) and Department of Insurance (DOI) will have new powers under both state and federal law to regulate insurers. Starting in 2011:
* Children can’t be denied for pre-existing conditions, to encourage insurers to continue to offer child-only coverage, and to set new limits on how much such children can be charged, under AB2244(Feuer), sponsored by Health Access California.
The new law is already having an impact, as insurers have announced that starting January 1st, they will sell policies to all children, even those with pre-existing conditions–which is a welcome and much-needed change. If families sign their children up in open enrollments periods–including the first two months of 2011, the child’s birthday month, or a life change in the family–they get the benefit of a limited rate. In those open enrollment periods, children with pre-existing conditions can’t be charged a premium more than twice what any other child is charged. Now that every child is now eligible for coverage, families should consider a new year’s resolution to cover all their children.
* Health insurance rate hikes must go through a public rate review, including making public both the rate hike request and its justifications, under SB1163(Leno), sponsored by Health Access California.
Starting January 1st, health insurers will need to give more notice and more justification of their rate hikes in a more public way. When Anthem Blue Cross’ infamous 39% rate increase came under such scrutiny earlier this year, it had to be withdrawn–and this new law will given every rate increase that level of scrutiny. Ratepayers will get 60 days notice of rate hikes, and the insurers will have to show more of their data. This is be a good first step toward more transparency and accountability for insurers, as we make the case for broader rate regulation.
* Other patient protections that conform state law to the federal Affordable Care Act include a ban on rescissions, under AB2470(De La Torre); the requirement that there be no cost-sharing for preventative care in new health policies, under AB23345(De La Torre); and the requirement to allow young adults up to age 26 to stay on their parents’ health coverage, under SB1088(Price).
It’s good to have a federal cop on the beat regulating insurers, but overseeing the insurance industry continues to be the primary responsibility of state regulators. These new California laws provide new options and new consumer protections against the worst insurance company abuses.
* Finally, California was the first-in-the-nation state to pass legislation, after the federal law, to implement it by setting up a new health insurance exchange. The exchange will be a purchasing pool, providing individuals and small businesses with subsidies to afford coverage, standardized benefits and the ability to comparison shop, and the barganing power of group purchasing. While this will take a few years to set up leading up to 2014, Governor Schwarzenegger is expected to make the first two appointments to the Board before he leaves office on January 3rd.
The heart of health reform, the Exchange will be a one-stop shop where millions of individuals and small businesses can get the bulk purchasing power that now only large employers and public programs enjoy. The first appointments to the Exchange and its first actions of the Exchange will be crucial in seeing if we can set this new marketplace up in time, and do it right.
An updated 9-month status report of the implementation of the federal health law in California report on how many Californians are actively taking advantage of the new options and benefits under the new law, and how California is improving upon it.