If you can believe it, the health insurance industry’s argument Tuesday against restricting rate hikes to once a year was that an incremental sprinkling of increases every few months would help consumers deal with sticker shock.
Of AB 2042, a bill to limit insurance companies to just one premium increase annually, a lobbyist for health plans said: “This only ensures that consumers will receive a bigger rate increase once a year.” In his view, multiple “adjustments” in a year’s time — that is, in addition to “the one-time annual global increase in our premiums” — would serve to soften the blow.
Members of the Assembly Health Committee, chaired by Assemblyman Bill Monning, weren’t buying the upside-down logic. AB 2042 by Assemblyman Mike Feuer (D) passed out of the committee on Tuesday on a 10-5 vote.
“There ought not be frequent increases in the course of a year,” Feuer told his colleagues. “Once is enough.” Another argument was that consumers need predictability in their premiums, that it’s impossible to plan an annual family budget if the rates go up mid-year.
The measure applies to policies sold on the individual market to people without group coverage or job-based coverage. In California, the individual market has been especially lucrative and is growing as more people lose benefits stability in these recessionary times.
Anthem Blue Cross dominates the individual market in California, with about 800,000 customers and little regulation. The insurance company’s recent notice to policy holders of an impending 39% rate hike gained notoriety as national health reform picked up speed and became the law of the land.
“This measure complements the recent federal health reforms by ensuring that health insurers are prohibited from raising their rates multiple times per year,” said Feuer. “If insurers raise rates when their subscribers aren’t expecting an increase, cash-strapped families could be forced to give up their coverage.”
Feuer announced the bill after the Assembly Health Committee held an oversight hearing examining the proposed rate increases of several health insurers. In addition to Anthem Blue Cross’ 39% hike scheduled to go into effect May 1, it was learned that several other health insurers have raised their subscribers’ premium rates in the 30 to 40 percent range.
With public outrage growing over the practice, consumers began speaking up about having to endure premium hikes two/three times a year or more in the individual policy market.
Consumers Union’s Betsy Imholz testified in favor of AB 2042, on Tuesday and Health Access is a sponsor of the legislation. Labor groups also back the measure.
California families need reform not just at the federal but at the state level. Given these tough economic times, we can’t let insurers jack up health premiums whenever they feel like it.