California Insurance Companies Required to Justify Their Rates to the Public Initiative (2014)
|Insurance Companies Required to Justify Their Rates to the Public|
|Status:||On the ballot|
Its sponsors originally hoped to qualify their measure for the November 6, 2012 ballot. They submitted over 800,000 signatures on May 18, 2012. On June 28, it became evident that election officials would not have adequate time to scrutinize the signatures for validity in time for placement on the November 6, 2012 ballot. On August 23, 2012, it was announced that the measure had qualified for the 2014 ballot.
Two different versions of the initiative were submitted to election officials. There are some differences between the versions. However, each version would:
- Require that health insurance rate changes must be approved by Insurance Commissioner before taking effect.
- Require a sworn statement by health insurance companies submitting rate change requests certifying the accuracy of the information they submit to the Insurance Commissioner to justify the rate change they are proposing.
- Provide for public notice, disclosure and hearing on health insurance rate changes, and subsequent judicial review.
- Prohibit health, auto and homeowners insurers from determining policy eligibility or rates based on lack of prior coverage or credit history.
The main area where the two versions differ is with respect to employer large group health plans.
- Version #11-0072 would exempt employer large group health plans, unless requested or rate increase exceeds 10 percent.
- Version #11-0070 would exempt employer large group health plans under any circumstances.
Text of measure
- "Requires health insurance rate changes to be approved by Insurance Commissioner before taking effect. Requires sworn statement by health insurer as to accuracy of information submitted to Insurance Commissioner to justify rate changes. Provides for public notice, disclosure and hearing on health insurance rate changes, and subsequent judicial review. Exempts employer large group health plans, unless requested or rate increase exceeds 10 percent. Prohibits health, auto and homeowners insurers from determining policy eligibility or rates based on lack of prior coverage or credit history."
Fiscal impact statement:
- "Increased state administrative costs in the low tens of millions of dollars annually to regulate health insurance rates, funded with revenues collected from filing fees paid by health insurance companies."
- "Requires health insurance rate changes to be approved by Insurance Commissioner before taking effect. Requires sworn statement by health insurer as to accuracy of information submitted to Insurance Commissioner to justify rate changes. Provides for public notice, disclosure and hearing on health insurance rate changes, and subsequent judicial review. Does not apply to employer large group health plans. Prohibits health, auto and homeowners insurers from determining policy eligibility or rates based on lack of prior coverage or credit history."
Fiscal impact statement:
- "Increased state administrative costs ranging in the low millions to low tens of millions of dollars annually to regulate health insurance rates, funded with revenues collected from filing fees paid by health insurance companies."
- Harvey Rosenfield said, "Premiums are going through the roof. A lot of people can't get health insurance at any price. Benefits are going down. Company CEOs are getting rich."
- Jamie Court, the president of Consumer Watchdog, stated, "The public wants accountability and transparency for the skyrocketing rates being charged. Rates have been rising five times faster than the rate of inflation."
- Dr. Mohammad Gharavi, a heart and lung surgeon in Thousand Oaks, argued, "If I had a choice of insurance companies controlling it or the government controlling it, I'd rather have the government."
- Thomas Steyer contributed $200,000 to the effort to collect enough signatures to qualify the measure for the ballot.
- Stewart Resnick gave $25,000. A billionaire, Resnick is the chairman of a company that produces Pom Wonderful pomegranate juice and Fiji Water.
- Paul Goldenberg gave $25,000. He is the founder of the Paul's TV retail chain.
The insurance industry is expected to oppose the measure. Michael Mattoch, an executive at auto insurer USAA, predicted that the insurance industry could spend in the vicinity of $100 million to defeat it.
- "Giving a politician the power to set prices does not address the real reason healthcare costs are increasing and could threaten patients' access to medical care," according to Charles Bacchi, who is the executive vice president of the California Association of Health Plans.
- Patrick Johnston, president of the California Association of Health Plans, said the initiative would create "misguided, onerous rate regulation" that would harm consumers.
- James T. Hay, president of the California Medical Association, stated, "This misguided measure will cause higher rates and lessen access to care, which is why doctors, hospitals and healthcare providers oppose this measure."
- C. Duane Dauner of the California Hospital Association argued, "This initiative does not address government payment shortfalls."
- Dr. Paul Phinney, a Sacramento pediatrician, said, "They're gambling that people will submit a knee-jerk vote and create a program that will be a cash cow for consumer attorneys."
The following are the donors to the campaign against the initiative as of March 14, 2014:
|Wellpoint, Inc. and Affiliated Entities||$12,500,000|
|Kaiser Foundation Health Plan, Inc. / KP Financial Services||$270,000|
|Anthem Blue Cross||$270,000|
|Blue Shield of California||$180,000|
|Health Net, Inc.||$135,000|
|United Healthcare Insurance Company||$30,000|
|California Association of Health Plans||$15,000|
The text of #11-0070 and #11-0072 contains poison pill language directed at #11-0013, a initiative that allows auto insurers to give consumers "persistency discounts".
The "Persistency Discounts Initiative", which has already qualified for the November 6, 2012 ballot, is supported by George Joseph, the chair of insurance company Mercury General. He is sometimes described in the press as the arch-nemesis of Harvey Rosenfield.
Insurers have argued that the poison pill language in the health insurance rate-setting initiative is an unconstitutional violation of California's single-subject rule. The likelihood that they would therefore challenge it in court on those grounds if it is approved by voters is high.
Path to the ballot
- See also: California signature requirements
- Jamie Court submitted two versions of the proposed initiative; #11-0070 on November 8 and #11-0072 on November 10, 2011.
- The ballot title and ballot summary for #11-0070 were issued by the Attorney General of California's office on January 3, 2012.
- The ballot title and ballot summary for #11-0072 were issued by the Attorney General of California's office on January 4, 2012.
- Either measure required 504,760 valid signatures for qualification purposes.
- The 150-day circulation deadline for #11-0070 was June 1, 2012.
- The 150-day circulation deadline for #11-0072 was June 4, 2012.
- Supporters of the initiative said in February 2012 that they expected to file the required signatures by April 1, 2012.
- About 800,000 signatures were submitted on Friday, May 18, 2012.
- It was possible that election officials would be able to scrutinize the submitted signatures in time to qualify the measure for the November 6, 2012 ballot. The recommended deadline for submitting the signatures in order to qualify for the November 2012 ballot was April 20.
- However, on June 28, it became clear that not enough time was left to qualify the measure for November 6, 2012 ballot.
- The California Secretary of State's office announced on August 23, 2012 that the measure had qualified for the state's November 4, 2014 ballot.
In the wake of the extended signature verification process that led to the initiative qualifying for the 2014 ballot, rather than the intended 2012 ballot, Consumer Watchdog released a statement arguing that the state's signature verification process should be changed. They said, "A flawed signature verification process wasted hundreds of thousands of taxpayer dollars on an unnecessary full signature count, and Californians now have to wait two extra years to vote to get outrageous health insurance prices under control. Citizens usually take to the initiative process only when legislative reform has proved impossible, meaning ballot measures address problems for which a fix is long overdue. It's time to lower the random sample threshold to ensure that measures like this one make the ballot they are intended for, and save the counties the significant time and expense of a full count."
Cost of signature collection:
The cost of collecting the signatures to qualify the initiative for the ballot came to $1,728,998.
The signature vendor was Kimball Petition Management.
- Letter requesting a ballot title for Initiative 11-0070
- Letter requesting a ballot title for Initiative 11-0072
- Los Angeles Business Journal, "Signatures Submitted for Health Insurance Rate Initiative", May 18, 2012
- Sacramento Bee, "Initiative on health insurance rates won't make November ballot", June 28, 2012
- Home Insurance, "Groups working to expand California's Proposition 103", November 15, 2011
- Los Angeles Times, "Sen. Feinstein backs health insurance rate controls", February 1, 2012
- Los Angeles Times, "Insurance rate-hike initiative gains high-profile backers", May 1, 2012
- Los Angeles Times, "Consumer advocate Harvey Rosenfield takes on health insurers", November 26, 2011
- Ventura County Star, "Initiative to regulate health insurance hikes sparks big debate", April 14, 2012
- Los Angeles Times, "Battle escalates over ballot measure on health premiums", March 12, 2012
- California Secretary of State, "Campaign Finance: Californians Against Higher Healthcare Costs, a Coalition of Doctors, Hospitals, Health Insurers and California Employers," accessed March 14, 2014
- California Healthline, "SEIU-UHW Says Ballot Initiatives Seek To Stop 'Hospital Price Gouging'", February 15, 2012
- Herald Online, "Ballot Initiative to Make Health Insurance Companies Justify Rates Should Have Qualified for 2012 Ballot According to Official Signature Count Released Today, says Consumer Watchdog Campaign", August 27, 2012