Consumer Federation of California

The Field Poll released a survey today finding that 50% of California voters have difficulty affording health care, and 73% say insurance costs are the most difficult to afford. California voters will soon have the chance to make health insurance more affordable by requiring insurance companies to publicly justify and get approval for health insurance rates before they take effect.

“As the availability of health insurance expands under Obamacare, and with the deadline for every American to get health insurance just a few months away, a majority of Californians have personal experience with the need to make health insurance more affordable,” said Carmen Balber, executive director of Consumer Watchdog. “Yet California is one of the few states where health insurance companies still don’t have to justify their prices before raising rates.”

The Health Insurance Rate Public Justification and Accountability Act on the November 2014 ballot would make health insurance rates more transparent and allow the insurance commissioner to reject a rate that is found to be excessive. The ballot measure, backed by U.S. Senator Dianne Feinstein and California Insurance Commissioner Dave Jones, would extend California’s successful system of regulation for auto and home insurance rates to health insurance.

Health insurance premiums rose 170% in the last decade, more than five times the 31.5% rate of inflation over the same period, according to the California HealthCare Foundation. In recent years, consumers’ health insurance premiums continued to rise in the double digits even as medical spending slowed. The Centers for Medicare and Medicaid Services reported in January that health spending increased just 3.9% in 2011, a record low pace of growth for the third year in a row. The Bureau of Labor Statistics Consumer Price Index reported the cost of medical care services increased just 3.7% in 2012.

Unreasonable health insurance rate hikes have become the norm in California. Anthem Blue Cross imposed an unreasonable rate hike on more than 250,000 small business customers in December. According to the analysis that found the 10% hike was unreasonable, Anthem’s “company-wide rates of return on equity have been and remain excessive.” Anthem Blue Cross imposed another unreasonable rate hike of 16% on 120,000 Californians with individual policies in 2011. Anthem’s parent company, Wellpoint, recently announced a 24% profit increase and its stock hit an all-time high. Another unreasonable 20% increase for 283,000 Californians was imposed in March by Blue Shield of California.

The Health Insurance Rate Public Justification and Accountability act is modeled after California’s successful insurance reform law, Proposition 103, that regulates auto, home and business insurance rates and requires insurers to open their books, publicly justify and get approval for rate increases before they take effect. Prop 103 was enacted by the voters in 1988 and has saved California drivers over $62 billion on their auto insurance premiums.