In California, health insurance is already thoroughly regulated by the state. The Covered California agency — which implements the state’s version of the federal Affordable Care Act — negotiates with insurers on plans and rates. The Department of Managed Health Care and the Department of Insurance also mandate basic requirements on benefits and access to doctors.
Now voters are being asked to add a sweeping new level of regulation. Proposition 45 would give the state insurance commissioner the right not just to block increases in premiums for individual and small group health insurance but to dictate benefits, co-payments and deductibles, notes the state Legislative Analyst’s Office.
Leading the push for the measure are state Insurance Commissioner Dave Jones and the Consumer Watchdog group. They say insurers have a history of being capricious and arbitrary in rate hikes, citing a handful of high-profile examples.
But this paints a distorted view of health insurance availability and cost. Profit margins are hardly excessive. Instead, health insurance is such a difficult industry to make money in that Covered California struggles to find insurers in some parts of the state.
This is why Covered California board member Susan Kennedy warns that Proposition 45 is “going to end up hurting Californians, hurting consumers, increasing costs, and it will damage health-care reform.”
The health industry is fairly described as in terror of Proposition 45 and its investment of such vast power in one bureaucrat. The measure is so far-reaching that it even gives the insurance commissioner the right to invalidate any rates proposed after Nov. 6, 2012, and to mandate retroactive refunds if the rates are found unacceptable. Insurers fear this could cause chaos.
Plainly, Proposition 45 is not a carefully drafted measure driven by noble goals. The measure is a power and money grab that would benefit the group that drafted it and serves as its primary advocate.
Consumer Watchdog depicts itself as a populist defender of the little guy against avaricious business interests. But critics make a powerful case that the organization — which refuses to reveal its major contributors — amounts to a trial lawyers’ front group, constantly advocating for complex laws and regulations that pave the way for more lawsuits. That’s a certain result if Proposition 45 passes.
Sneakily enough, the measure also mandates an “intervenor” process in which a third party is paid to evaluate proposed rate hikes. Who has raked in millions from the “intervenor” process with other types of insurance and would be poised to rake in millions more under Proposition 45? You guessed it: Consumer Watchdog.
This is only the latest example of special interest groups trying to hijack and profit off California’s system of direct democracy. We urge voters to see this scam for what it is and vote no on Proposition 45.