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California assembly passes bill requiring prior approval of health insurance rates
By Insure.com staff

A bill that would give state regulators the power to stop health insurance companies from imposing excessive premium increases won approval by the California Assembly.

The 44-27 vote split along party lines with Democrats voting in favor of the bill. Republicans walked off the Assembly floor before the vote was taken. The bill now heads to the Senate, where Democrats hold 25 seats and Republicans hold 15.

The bill would require health insurers to get approval from regulators before raising premiums, copayments or deductibles. Presently, regulators can review rates but cannot prevent insurance companies from increasing them.

Insurance Commissioner Dave Jones praised passage of the bill. Jones, a former state legislator, proposed similar legislation three times when he was an assemblyman.

How the bill could affect health insurance rates

Double-digit health insurance premium increases have become common in California in the last few years. This year, Anthem Blue Cross and Blue Shield of California announced rate increases of up to 59 percent. The companies agreed to postpone the rate changes and submitted them to independent review, already required by state law, but the insurers can still institute premium increases even if the review concludes they are excessive.

"Californians have no reason to believe that insurance companies will stop ripping us off voluntarily," Doug Heller, executive director of Consumer Watchdog, said in a statement after the Assembly vote June 2. "State regulators should have the power to block excessive health insurance rates, and, today, California lawmakers took a huge step in that direction."

But the California Association of Health Plans says the bill will provide no relief from the underlying causes driving up health insurance rates. Additionally, the bill could decrease the number of available physicians and the time they can spend with patients. The group says the bill will create new bureaucracies that will cost taxpayers $30 million at a time when the state faces a budget crisis.

 

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