The California State Assembly has passed a bill that would require health insurance companies to obtain approval before being able to raise rates for California customers. State Assembly members Dave Jones (D-Sacramento) and Mike Feuer (D-Los Angeles) sponsored Bill 2578, which now goes to the State Senate.

The bill states that an insurer must obtain approval from the Department of Managed Health Care or the Department of Insurance for any increase in the amount of a premium, copayment, coinsurance obligation, deductible, and other charges in a health care plan or policy. The bill would add on to California's Knox-Keene Health Care Service Plan Act of 1975, which provides for the licensure and regulation of health care service plans and makes a willful violation of the act a crime.

Under the terms of the bill, each department would notify the public of any rate application, and approve the application within 60 days of that notice unless the department holds a hearing on the application. In reviewing an application, the department would consider if the rate is excessive, inadequate or unfairly discriminatory. In that review, the department would evaluate if the rate is reasonable in comparison to coverage benefits.
No health plan would be able to submit more than one rate application each calendar year. In the application, the insurer would have to provide information including the average rate change per affected enrollee or group that would result from approval of the increase, the medical loss ratio that will result, and the salaries and bonuses paid to the 10 highest-paid officers and employees of the applicant.

Assembly member Jones introduced the bill after the fallout from the Anthem-Blue Cross hike earlier this year. Jones said the measure simply extends to health insurance the rate regulation that has already been in place for the auto, property and casualty insurance areas.

Jones' remarks can be found at: http://democrats.assembly.ca.gov/members/a09/Pressroom/Press/20100323AD09PR01.aspx

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