Going Large on Rate Review

Yesterday the Senate Health Committee considered SB746 (Leno) that would extend rate review requirements to the large group market.  The Affordable Care Act requires regulators to review rates filed by health plans in the individual and small group markets to ensure that those rates are reasonable and justifiable.  Senator Leno’s bill SB1163, which was signed into law in 2010, put that important consumer protection into California law.  Since that time, rate review has saved California consumers over $300 million dollars, and consumers across the country over $2.1 billion.

Large groups purchasers, employers that buy insurance for more than 50 workers, who are excluded from existing law, would ideally have enough leverage to negotiate reasonable rates with insurers, but the California insurance market is dominated by a handful of large insurers, and even a larger large employer represents such a small portion of an insurers business that they have little leverage in negotiating rates, or even getting information about how rate increases are determined.

SB746 would require insurers to provide data such as utilization rates, trend, and claims data that provides greater transparency regarding how their rates are determined.  Senator Leno explained that this bill is really a jobs bill, which empowers employers to take control of health care costs that are rising at an unsustainable rate and negotiate on behalf of their workers “in the sunshine”.

SB746 passed out of committee on a party-line vote.

Additionally, the committee heard SB640 (Lara), which would prohibit a reduction in Medi-Cal provider payments that was passed by the legislature in 2011 from going into effect.  This bill passed with bipartisan support and strong support from California provider groups.

The Committee also passed SB28, related to facilitating greater outreach and enrollment into the exchange.

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