Bill to Alert Consumers of ‘Unreasonable’ Health Plan Rate Hikes Heads to Governor

Under existing law, the California Department of Managed Health Care and the California Department of Insurance review rate hikes proposed by the insurers and health plans each regulates.

When the agencies conclude that an increase is unjustified, they can ask the insurer to rescind the increase, but the company is not legally obligated to comply. The two departments’ only recourse is to post the information on their websites.

SB 908, by Sen. Ed Hernandez (D-West Covina), would require the insurer to send a written notice to policyholders telling them that regulators found a price hike “unreasonable or not justified.”

To give consumers time to shop for a new plan, the measure would require insurers to send that notice to consumers at least 60 days before the policy renewal date, or 10 days before the start of the next health insurance open enrollment period.

“Frankly, most consumers aren’t looking over a Department of Managed Health Care or Department of Insurance website,” Anthony Wright, executive director of bill sponsor Health Access California, told KPCC when Hernandez introduced the bill in January.

“And even if they did, it would be hard for them to figure out whether the plan they’re in has the unreasonable rate,” he said.

America’s Health Insurance Plans, the Association of California Life and Health Insurance Companies and the California Association of Health Plans oppose the bill.

Association of Health Plans spokeswoman Nicole Kasabian Evans suggested in a January interview with KPCC that the legislation was unnecessary.

Noting that regulators already post information about rates that are deemed “unreasonable” online, she argued that “we already have a pretty good system out there.”

The governor has not indicated whether he will sign the legislation.

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