Proposal would require approval for insurance rate hikes

March 23, 2010 7:56:25 PM PDT
Something not included in the health care reform legislation is limits on how much insurance companies can charge. Some state lawmakers are hoping to change that.

Consumer advocates worry about the requirement in the new health care overhaul that everyone have insurance, even if they have to buy it on their own.

"Nothing in the bill, shockingly, constrains what an insurance company can charge for the coverage," says Jerry Flanagan with Consumer Watchdog.

Senator Dianne Feinstein, D-CA, worked with President Obama to include price controls in the Health care reform plan, but there were too many procedural hurdles.

The Assembly Health Committee just passed a proposal that would require state approval if health insurers want to increase their premiums, the way it works now for car and homeowner policies.

"Rate hikes that are excessive, inadequate or unfairly discriminatory would be rejected," says Democratic Assemblyman Dave Jones of Sacramento.

The proposed pre-approval comes just a month after lawmakers grilled Anthem Blue Cross forcing company president, Leslie Margolin, to justify rate hikes of as much as 39 percent to 800,000 California customers despite record profits.

"Have you no shame?" Margolin was asked February 23.

"The question is, is disappointing to me, Mr. Chairman," she resembled.

The insurance industry opposes a pre-approval process because rate hikes are based on the cost of care.

"A bill like this does absolutely nothing to lower the cost of health insurance, which is largely driven by hospital costs, doctor costs, and prescription drug costs," says Charles Bacchi with the Association of Health Plans.

Anthem policyholder Laurel Kaufer of San Fernando Valley saw her premiums rise to nearly $15,000 a year and wants safeguards like state approval for rate hikes.

"At least, there would be some mechanism in place to guarantee that the rate increases are a necessity, not just to improve the bottom line of shareholders," she says.


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