California Proposition 45, Insurance Companies Required to Justify Their Rates to the Public Initiative (2014)

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Proposition 45
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Type:Initiative
Topic:Insurance
Status:On the ballot
California Proposition 45, the Insurance Companies Required to Justify Their Rates to the Public Initiative, is on the November 4, 2014 ballot in California as an initiated state statute.

Two different versions of the initiative - #11-0070 and #11-0072 - were submitted to election officials. Initiative #11-0070 is the one that qualified for the ballot.

If approved by voters, the initiative would:

  • Require that health insurance rate changes must be approved by the California 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.
  • Exempt employer large group health plans under any circumstances

The initiative, in general, would expand to health insurance rate regulation system to what Proposition 103 (1988) imposed on automobile and homeowners insurance.[1]

Its sponsors originally hoped to qualify their measure for the November 6, 2012 ballot. They submitted over 800,000 signatures on May 18, 2012.[2] 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.[3]

Text of measure

See also: Ballot titles, summaries and fiscal statements for California's 2014 ballot propositions

11-0070

Ballot title:

Approval of Healthcare Insurance Rate Changes. Initiative Statute.

Official summary:

"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:

(Note: The fiscal impact statement for a California ballot initiative authorized for circulation is jointly prepared by the state's Legislative Analyst and its Director of Finance.)

"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."

Support

CW Yes on 45 2014.png

The campaign in support of Proposition 45 is being led by Consumer Watchdog.[4]

Supporters

Officials

Organizations

  • Courage Campaign[6]
  • California Industrial Areas Foundation (IAF)
  • California National Organization for Women (NOW)
  • Consumer Federation of California
  • Consumer Watchdog
  • Consumer Attorneys of California
  • California Alliance for Retired Americans
  • Congress of California Seniors (CCS)
  • San Diego Hunger Coalition
  • Coalition for Economic Survival (CES)
  • California Partnership
  • Campaign for a Healthy California
  • Coalition of California Welfare Rights Organizations, Inc.
  • Los Angeles Alliance for a New Economy (LAANE)
  • Actual Systems Web Services
  • AllCare Alliance
  • Physicians for a National Health Program (PNHP) - California

Unions

Individuals

Arguments

  • 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."[8]
  • 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."[5]
  • 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."[9]

Donors

Total campaign cash Campaign Finance Ballotpedia.png
as of July 11, 2014
Category:Ballot measure endorsements Support: $1,112,423
Circle thumbs down.png Opposition: $37,303,550

Two ballot measure campaign committees registered in support of the initiative as of July 11, 2014:[10]

Note: Consumer Watchdog Campaign, A Coalition of Consumer Advocates, Attorneys and Nurses is supporting Proposition 45 and Proposition 46.
Committee Amount raised Amount spent
Consumer Watchdog Campaign, A Coalition of Consumer Advocates, Attorneys and Nurses $466,991 $203,812
Consumer Watchdog Campaign to Make Health Insurance Companies Justify their Rates $576,896 $65,529
Jones for Passage 2014 Insurance Rate Public Justification & Accountability Act $68,536 $20,662
Total $1,112,423 $290,003

The following are the donors contributing $15,000 or more to the campaign in support of the initiative as of July 11, 2014:[10]

Note: Some of these donors gave their money to a committee that was simultaneously supporting more than one ballot measure. When that is the case, it is not generally possible to break down how much of that donor's money specifically was spent on the campaign for a particular proposition. Those contributions are listed below with shading; readers should not assume that all or even most of a donation to a multi-purpose committee was used for expenditures related to this particular proposition.
Donor Amount
Consumer Watchdog $481,775
Thomas Steyer $200,000
Greene Broillet & Wheeler, LLP $125,000
Committee for Corporate Accountability and Consumer Protection $105,121
CA Nurses Association Initiative PAC $75,000
Your Neighbors for Patient Safety, a Coalition of Consumer Attorneys & Patient Safety Advocates $25,881
California Federation of Teachers COPE Prop/Ballot Committee $25,000
Consumer Watchdog Campaign to Stop Prop 33 $16,110
CA Ambulatory Surgery Association PAC $15,000

Opposition

Californians Against Higher Health Care Costs 2014.png

The organization leading the campaign in opposition to Proposition 45 is Californians Against Higher Health Care Costs.[11]

Opponents

See also: A full list of opponents

Organizations

  • California Chamber of Commerce
  • California Medical Association
  • California Hospital Association
  • California Orthopaedic Association
  • California Association of Health Plans
  • California Association of Health Underwriters
  • California Association of Marriage and Family Therapists
  • California Chapter of the American College of Cardiology
  • California Children's Hospital Association
  • American Academy of Pediatrics, California
  • American Congress of Obstetricians and Gynecologists District IX
  • American College of Physicians California Services Chapter
  • American Nurses Association California
  • Association of Northern California Oncologists
  • Association of California Healthcare Districts
  • Association of California Life and Health Insurance Companies
  • California Association of Rural Health Clinics
  • California Society of Plastic Surgeons
  • California State Oriental Medical Association
  • California Urological Association
  • CAPG
  • Employer Health Coalition
  • NAACP California
  • California Citizens Against Lawsuit Abuse
  • Civil Justice Association of California
  • William Jefferson Clinton Democrats
  • California Taxpayer Protection Committee

Unions

  • State Building and Construction Trades Council of California
  • Imperial County Building and Construction Trades Council
  • Los Angeles/Orange County Building and Construction Trades Council
  • California-Nevada Conference of Operating Engineers
  • United Contractors
  • International Brotherhood of Boilermakers
  • International Brotherhood Of Electrical Workers - 9th District
  • Sailors’ Union of the Pacific

Arguments

Californians Against Higher Health Care Costs issued a "Get the Facts" sheet detailing their reasons for opposing Proposition 45. The sheet reads:

CONTROLLING HEALTH CARE COSTS IS IMPORTANT, BUT THIS FLAWED, DECEPTIVE MEASURE WILL JUST INCREASE COSTS FOR CONSUMERS AND HARM THE QUALITY OF OUR HEALTH CARE.

A special interest group is sponsoring an initiative on the November 2014 ballot that gives ONE POLITICIAN new power over our health care – including our co-pays, deductibles and even the treatment options our health insurance covers.

We all want to control health care costs – that’s why California has a new independent commission with the authority to negotiate rates with health plans and reject them if they’re too expensive. We should give this commission a chance to work, NOT give more power to a politician who can take campaign contributions from special interests.

This flawed, deceptive measure will just increase costs for consumers and harm the quality of our health care.

1. Gives One Politician Too Much Power
  • Gives one politician new power over what treatment options your health insurance covers. Treatment decisions should be made by doctors and patients, not someone with a political agenda.
  • Grants the insurance commissioner more power over health care while allowing millions in campaign contributions from special interests – with no safeguards against corruption.
  • Gives one politician sweeping new power over rates, co-pays, and benefits for millions of small business employees and could force many small businesses to lay off workers, drop coverage, or even go out of business.
2. Creates More Costly Bureaucracy
  • Creates ANOTHER expensive state bureaucracy when we can least afford it, ultimately paid for with higher health insurance premiums.
  • Costs tens of millions of dollars for bureaucracy, bureaucrats, and salaries, but doesn’t do anything to control the costs that are driving health care premiums.
  • Duplicates existing bureaucracy and regulation with a new program, creating costly confusion and overlap with other state and federal laws and regulations.
3. Sponsored by Special Interests Who Stand to Make Millions Under the Measure
  • Sponsored by special interest lawyers who included a hidden provision allowing them to charge up to $675/hour and make tens of millions in fees off costly health care lawsuits.
  • The proponents have made more than $11 million off a similar provision in the last ballot measure they bankrolled – costs that were ultimately paid by consumers.
  • Proposes special interest reforms of a large and complicated health system without the input of patients, doctors, hospitals, or health plans.
4. Interferes With Your Treatment Options
  • Gives one politician power over co-pays, deductibles, benefits, and even what treatment options your health insurance covers.
  • Treatment decisions should be made by doctors and patients — not someone with a political agenda.

[12]

—Californians Against Higher Health Care Costs, [13]

Other arguments in opposition to the initiative include:

  • Patrick Johnston, president of the California Association of Health Plans, said the initiative would create "misguided, onerous rate regulation" that would harm consumers.[5]
  • 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."[14]
  • 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."[9]

Donors

Two ballot measure campaign committees registered in opposition to the initiative as of July 11, 2014:[10]

Committee Amount raised Amount spent
No On 45 - Californians Against Higher Healthcare Costs $37,303,550 $1,574,912
No On 45: California Association of Health Underwriters Issues Committee $0 $0
Total $37,303,550 $1,574,912

The following are the donors to the campaign against the initiative as of July 11, 2014:[10]

Donor Amount
Kaiser Foundation Health Plan, Inc. / KP Financial Services $14,590,350
Wellpoint, Inc. and Affiliated Entities $12,500,000
Blue Shield of California $9,693,200
Anthem Blue Cross $270,000
Health Net, Inc. $135,000
United Healthcare Insurance Company $70,000
California Association of Health Plans $45,000

Legal vulnerability

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.[8]

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.[8]

Path to the ballot

2014 propositions
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June 3
Proposition 41
Proposition 42
November 4
Proposition 43
Proposition 44
Proposition 45
Proposition 46
Proposition 47
Proposition 48
DonationsVendors
EndorsementsFull text
Ballot titlesFiscal impact
Local measures
See also: Signature requirements for ballot measures in California

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."[16]

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.

See also: California ballot initiative petition signature costs

See also

External links

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Basic information

Support

Opposition

References

  1. Home Insurance, "Groups working to expand California's Proposition 103," November 15, 2011
  2. 2.0 2.1 Los Angeles Business Journal, "Signatures Submitted for Health Insurance Rate Initiative," May 18, 2012
  3. 3.0 3.1 Sacramento Bee, "Initiative on health insurance rates won't make November ballot," June 28, 2012
  4. Consumer Watchdog - Vote Yes on Prop 45, "Homepage," accessed July 11, 2014
  5. 5.0 5.1 5.2 Los Angeles Times, "Sen. Feinstein backs health insurance rate controls," February 1, 2012
  6. 6.0 6.1 6.2 Consumer Watchdog, "Endorsers," accessed July 11, 2014
  7. Cite error: Invalid <ref> tag; no text was provided for refs named tom
  8. 8.0 8.1 8.2 Los Angeles Times, "Consumer advocate Harvey Rosenfield takes on health insurers," November 26, 2011
  9. 9.0 9.1 Ventura County Star, "Initiative to regulate health insurance hikes sparks big debate," April 14, 2012
  10. 10.0 10.1 10.2 10.3 California Secretary of State, "Campaign Finance: Proposition 45," accessed April 17, 2014
  11. Californians Against Higher Health Care Costs, "Homepage," accessed July 9, 2014
  12. Note: This text is quoted verbatim from the original source. Any inconsistencies are attributed to the original source.
  13. Californians Against Higher Health Care Costs, "Get the Facts," accessed July 10, 2014
  14. Los Angeles Times, "Battle escalates over ballot measure on health premiums," March 12, 2012
  15. California Healthline, "SEIU-UHW Says Ballot Initiatives Seek To Stop 'Hospital Price Gouging'," February 15, 2012
  16. 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