CFC Supports AB 52 (Feuer) – Health Insurance Rate Approval

Bill Update: On June 2nd, AB 52  passed the Assembly by a vote of 44 to 7, with 29 abstentions (same as a no vote). On July 6th the bill passed the Senate Health Committee by a vote of 5 to 3. The bill now awaits a Senate floor vote. Tell your State Senator to vote yes!

CFC Position: Support

AB 52 would require prior approval from the Department of Managed Health Care (DMHC) or the Department of Insurance before an HMO or health insurer can increase insurance rates charged to policyholders or subscribers beginning January 1, 2012.  Rates requiring approval include premiums, co-payments and deductibles. 

As the state’s economy continues to decline, more consumers in California are making the tough choice as to whether they can afford purchasing health insurance for themselves and their families. Consumers who have employer-based coverage are finding it more difficult to afford their premium co-payments. Health insurance premium increases are soaring above the rate increases for wages, inflation and medical costs.  Small businesses are finding it difficult to pay for their employees’ health insurance contribution.

Unlike auto insurers who are required to seek prior approval from the Department of Insurance before increasing auto insurance rates, HMOs and health insurers have no similar requirement.  Additionally, some highly profitable health insurers and HMOs transfer large blocks of funds to out-of-state parent companies while continuing to implement rate increases on California consumers.  AB 52 will give the state a powerful tool to control unabated rate increases from HMOs and health insurers.

For these reasons, the Consumer Federation of California supports AB 52 (Feuer and Huffman).