California receives funds to review health insurance rates

By CMTA Staff

Capitol Update, Sept. 30, 2011

California has been awarded $4.3 million in federal grant funding to update the state’s health insurance rate review process.  $52 million in federal funding was awarded nationwide.  Approximately half of the California funding, $2.1 million, will be granted to the Department of Insurance (DOI) to hire additional rate review staff and fund independent consumer group rate reviews.  The remaining $2.2 million will be directed to the Department of Managed Health Care (DMHC) to help improve the department’s delivery of rate review information to consumers via its website.

Although California received substantial funding to improve the rate review process, Democratic Insurance Commissioner Dave Jones has conveyed his disappointment that an additional $1 million in funding was not granted since health insurance rates are not regulated by the state.  Commissioner Jones was a major proponent of a rate regulation bill, AB 52 (Mike Feuer, D-Los Angeles), this year that would have granted the DOI and the DMHC authority to modify, deny or approve health insurer rate increases.  Bill proponents, including the American Federation of State, County and Municipal Employees, the California Nurses Association and California Attorney General Kamala Harris, claimed the bill was necessary to curb excessive and unnecessary rate hikes.  Bill opponents, including the California Medical Association, California Association of Health Plans, argued that the bill failed to address one fundamental problem of health care – the seemingly never-ending increase of medical costs and services that ultimately lead to higher rates.  Opponents also argued that low income patient access to care could be reduced since doctors would receive reduced payments from insurers.

Despite the bill’s defeat this session, it remains eligible for reconsideration in 2012.

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