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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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 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


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."







  • 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."[7]
  • 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."[4]
  • 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."[8]


  • Thomas Steyer contributed $200,000 to the effort to collect enough signatures to qualify the measure for the ballot.[6]
  • Stewart Resnick gave $25,000. A billionaire, Resnick is the chairman of a company that produces Pom Wonderful pomegranate juice and Fiji Water.[6]
  • Paul Goldenberg gave $25,000. He is the founder of the Paul's TV retail chain.[6]


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.[9]


See also: A full list of opponents


  • 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


  • 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


  • "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.[7]
  • Patrick Johnston, president of the California Association of Health Plans, said the initiative would create "misguided, onerous rate regulation" that would harm consumers.[4]
  • 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."[10]
  • C. Duane Dauner of the California Hospital Association argued, "This initiative does not address government payment shortfalls."[10]
  • 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."[8]


The following are the donors to the campaign against the initiative as of March 14, 2014:[11]

Donor Amount
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

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.[7]

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.[7]

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
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."[13]

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



  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. 4.0 4.1 4.2 Los Angeles Times, "Sen. Feinstein backs health insurance rate controls," February 1, 2012
  5. Insurance News, "Consumer Watchdog Campaign: WellPoint Threatens 'Double-Digit Plus' Rate Increases but New CA Ballot Measure Will Force Health Insurers to Publicly...," March 27, 2014
  6. 6.0 6.1 6.2 6.3 Los Angeles Times, "Insurance rate-hike initiative gains high-profile backers," May 1, 2012
  7. 7.0 7.1 7.2 7.3 Los Angeles Times, "Consumer advocate Harvey Rosenfield takes on health insurers," November 26, 2011
  8. 8.0 8.1 Ventura County Star, "Initiative to regulate health insurance hikes sparks big debate," April 14, 2012
  9. Californians Against Higher Health Care Costs, "Homepage," accessed July 9, 2014
  10. 10.0 10.1 Los Angeles Times, "Battle escalates over ballot measure on health premiums," March 12, 2012
  11. 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
  12. California Healthline, "SEIU-UHW Says Ballot Initiatives Seek To Stop 'Hospital Price Gouging'," February 15, 2012
  13. 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