Initiative to regulate health insurance hikes sparks big debate

Initiative would regulate health care

To the woman who spends as much as $1,000 in a month on medical care and argues she saves money by not having insurance, the proposal makes sense.

Force health insurance companies to gain government approval before they impose rate hikes on individuals or employers.

"While they're at it, they can hit Exxon, too," said Mary Ryan, 61, of Camarillo, contending her history of skin cancer means that if she bought insurance, her premiums would cost $1,100 a month. She's no fan of government regulation, but the nonstop rise of premiums convinces her health insurance is one place Big Brother belongs.

"Of course," she said. "Why isn't it into stuff like that?"

The state's largest insurers, the California Medical Association and the California Hospital Association are fighting a proposed ballot initiative that would empower California's insurance commissioner to reject excessive rate hikes.

Leaders of Consumer Watchdog, an advocacy group that backed a landmark initiative 24 years ago to bring similar regulation to car, home and many other forms of insurance, are scrambling to qualify the proposition for the Nov. 6 ballot.

The watchdogs have collected more than 350,000 signatures but say they need more than 400,000 additional supporters by no later than mid-May. That number has pushed advocates to shuffle from what started as an all-volunteer grass-roots campaign to paying people to collect signatures. Consumer Watchdog President Jamie Court predicted it will cost $1 million to get the initiative on the ballot.

In the meantime, a battle royale likely will intensify, with both sides accusing the other of hidden agendas. Opponents say the initiative would open the door to a government takeover of health insurance while also allowing consumer advocates to rake in money through fees given to groups that fight proposed rate hikes.

"They're gambling that people will submit a knee-jerk vote and create a program that will be a cash

cow for consumer attorneys," said Dr. Paul Phinney, a Sacramento pediatrician and president-elect of the California Medical Association, a physicians organization.

Advocates say the opposition is focused on defeating the initiative now because it knows the measure will win if it qualifies for the ballot.

"They polled it, and they know it polls off the charts," said Court, noting surveys from Consumer Watchdog suggested at least 70 percent of Californians support rate regulation. "There's no question it's going to lower health insurance rates. It's going to change the balance of power."

As part of federal health care reform, insurance companies currently must submit proposed rate increases to the California Department of Insurance. State Insurance Commissioner David Jones can try to leverage companies into changing proposed hikes by threatening to label them as unreasonable, but he can't block them.

The proposition would change that as of Nov. 6. Insurance companies would have to justify rate increases, which would also go through public hearings. The law would also allow consumers to pursue refunds if existing premiums were deemed too high.

The proposal follows several failed attempts to pass similar laws in Sacramento.

Three of those attempts were authored by Jones, an assemblyman from Sacramento before he became insurance commissioner in 2010.

The initiative is based on Proposition 103, authored by Consumer Watchdog founder Harvey Rosenfield and approved by voters in 1988. It rolled back rates for many types of insurance — but not health — and gave the insurance commissioner the power to deny rate increases for many forms of property and liability insurance.

Ben Pfister, a Ventura teacher, has grown weary of seeing premiums increase. He doesn't know the details of the proposed initiative, but the concept intrigues him.

"It sounds wonderful to have some check and regulation," he said.

But if insurance premiums alarm consumers, others worry the initiative would arm a more dangerous threat: government.

"I don't think the government has any place regulating a free business," said Mike Joseph, a Camarillo painter.

Marvin Bryan, a retired general contractor from Upper Ojai, was more succinct. "The less government the better," he said.

The California Medical Association, which represents 35,000 doctors in California, is fighting the coalition.

That doesn't faze Dr. Mohammad Gharavi, a Thousand Oaks heart and lung surgeon who complains the cost of insuring his practice's employees has doubled in five years. Rising premiums hurt patients more, he said.

"I think there should be some control," Gharavi said, noting he's wary of regulation but is more fearful of the profit motive driving private insurers. "If I had a choice of insurance companies controlling it or the government controlling it, I'd rather have the government."

The initiative forces the insurance companies to pay fees that would fund the cost of the rate regulation program.

Phinney of the California Medical Association said insurers won't absorb the costs but will pass them on to consumers, meaning a larger chunk of premiums will be spent on rate regulation and not medical care.

"It's going to make it more difficult for more people to get the care they need," he said.

Court said the administrative costs will be a drop in the hat for insurance companies. He noted 34 other states and the District of Columbia give insurance regulators power to approve health insurance rate hikes.

But legislative proposals in California — opposed by health care organizations — have consistently failed.

"It's time for the voters to have their say," he said.

Both sides are unleashing uppercuts. Opponents contend Consumer Watchdog is motivated by the fees the initiative would give advocates and lawyers who intervene to block proposed rate hikes. Court said the California Medical Association is involved because it's indebted to Kaiser Permanente for the membership fees paid for the HMO's doctors.

Each side denies the other's accusations. Fireworks often accompany rate regulation battles, said Anthony Wright, executive director of Health Access.

"This is a political fight waged between a very popular concept and powerful interests with lots of money," Wright said. His advocacy group has backed previous fights for rate regulation but won't take a position on the Consumer Watchdog initiative until it qualifies for the November ballot.

The coalition opposing the initiative is funded largely by Kaiser Foundation Health Plan, Anthem Blue Cross, Health Net and Blue Shield. Coalition spokeswoman Jennifer Wonnacott said the insurers and others are worried the initiative gives insurance commissioner Jones too much power.

Federal health care reform empowered government to review rate increases. The review contributed to four insurance companies reducing proposed increases by an average of 9.7 percent, according to a federal government report.

"That actually saved over 87,000 Californians a total of $1.6 million per month in premium increases," said Wonnacott, arguing the reviews are working.

But the current system relies on insurance companies agreeing to lower rate increases, said Wright. Advocates say the proposal doesn't mean rate hikes will be rejected, but rather that insurance companies will have to prove increases are needed.

The initiative has coalesced hospitals, insurers and physician associations, groups that often fight bitterly. They're strange bedfellows because of the shared fear the initiative will lead to a single-payer insurance system controlled by the government, said Jim Lott, executive vice president of the Hospital Association of Southern California.

"I think the proposition, unfortunately, has a very good chance of passing," he said, citing the possibility of refunds off existing rates. "It's offering them a rate cut right off the top. I think it's going to be very tempting for them."

© 2012 Ventura County Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Comments » 32

Havorn writes:

The problem is the healthcare insurers. Every year that I've been back in California since 1986, my premiums have far exceeded inflation, sometimes by five times.

Anybody notice that the CEO of United Health Care was paid $1.7 BILLION two years ago?

The doctors are getting screwed, the patients are getting screwed and the insurance companies, especially the execs are getting rich.

Take them out of the equation. Let the govt pay for qualified students' med school costs with the stipulation that their license is only valid if they complete 10 years of service working for medicare, medicaid, or some other govt rate set program and watch them line up to apply.

brightside writes:

The health insurance industry is ALREADY one of the most regulated industries in America. More goverment interference is not going to bring premium costs down. More free market competition in the industry will....I hope CA does not buck the current national consensus that is correctly rejecting govt run healthcare/increased regulation. We already have enough problems to solve in this state without making more.

InsideEdge writes:

FIRST regulate how much the doctors/hospitals charge. Then worry about the rest. My duaghter was just in the ER at St Johns, $1500 for 4 stitches...thats right $1500 is what my health care paid them. For a grand total of 10 minutes of a doctors time and some thread. and a 10 minute return visit to remove the stitches. That makes $5 gas seem reasonable. So quit b----ing about the health ins companies. We have to get to the root of the problem FIRST!

Huskerfan writes:

in response to Havorn:

The problem is the healthcare insurers. Every year that I've been back in California since 1986, my premiums have far exceeded inflation, sometimes by five times.

Anybody notice that the CEO of United Health Care was paid $1.7 BILLION two years ago?

The doctors are getting screwed, the patients are getting screwed and the insurance companies, especially the execs are getting rich.

Take them out of the equation. Let the govt pay for qualified students' med school costs with the stipulation that their license is only valid if they complete 10 years of service working for medicare, medicaid, or some other govt rate set program and watch them line up to apply.

Actually, that was in 2007 and it was exit compensation. He was forced by the SEC (guess their power extends far beyond the football field) to repay $468M of that in penalties.

Still, the pay is without a doubt ridiculous. UnitedHealth Group still has a CEO compensation problem according to this infographic:

http://www.payscale.com/ceo-income

viking2265 writes:

in response to Havorn:

The problem is the healthcare insurers. Every year that I've been back in California since 1986, my premiums have far exceeded inflation, sometimes by five times.

Anybody notice that the CEO of United Health Care was paid $1.7 BILLION two years ago?

The doctors are getting screwed, the patients are getting screwed and the insurance companies, especially the execs are getting rich.

Take them out of the equation. Let the govt pay for qualified students' med school costs with the stipulation that their license is only valid if they complete 10 years of service working for medicare, medicaid, or some other govt rate set program and watch them line up to apply.

"Let the gov't. pay"? Please rephrase...let the taxpayers foot the bill. Where do you think the government gets it's money to pay for anything?
But if you want to support a med student, be my guest.

VintageRacer writes:

in response to InsideEdge:

FIRST regulate how much the doctors/hospitals charge. Then worry about the rest. My duaghter was just in the ER at St Johns, $1500 for 4 stitches...thats right $1500 is what my health care paid them. For a grand total of 10 minutes of a doctors time and some thread. and a 10 minute return visit to remove the stitches. That makes $5 gas seem reasonable. So quit b----ing about the health ins companies. We have to get to the root of the problem FIRST!

ER costs are substantially higher than a regular doctor's visit. The high costs are due to

1) Higher number of staff required
2) More specialized equipment
3) Uninsured recipients of medical care

These costs are prorated and added to the actual costs to suture your daughter.

6mac writes:

Sad reality is the disconnect between the buyer of the service and the seller of the service. First insurance companies intervened, betting against the odds that we'd get sick. We took the bet and paid premiums balancing the odds on both sides of the bet. Once employers started picking up premiums the patient and the doctor were no longer on a first name basis. The problems that resulted screamed for govt intervention. Now insurance has become a right, an inevitability in a society where all are encouraged to claim they should get free stuff (read: paid by everyone else - taxpayers).

Healthcare is not free. Costs will only go up until the buyer and the seller are once again dealing on a first name basis. negotiating in the free market.

kramer writes:

in response to InsideEdge:

FIRST regulate how much the doctors/hospitals charge. Then worry about the rest. My duaghter was just in the ER at St Johns, $1500 for 4 stitches...thats right $1500 is what my health care paid them. For a grand total of 10 minutes of a doctors time and some thread. and a 10 minute return visit to remove the stitches. That makes $5 gas seem reasonable. So quit b----ing about the health ins companies. We have to get to the root of the problem FIRST!

If you were not an honest person you could have told them in broken English that you had no insurance, given them a fake name and address and gotten the treatment for free.

cassandra2 writes:

Makes sense. They want our markets, they can follow our rules. And in California the ordinary person has a chance, however slim, against the corporatocracy.

pilgrim2014#403694 writes:

in response to brightside:

The health insurance industry is ALREADY one of the most regulated industries in America. More goverment interference is not going to bring premium costs down. More free market competition in the industry will....I hope CA does not buck the current national consensus that is correctly rejecting govt run healthcare/increased regulation. We already have enough problems to solve in this state without making more.

"More free market competition in the industry will" - that would be fine if there was some kind of rush of new "competition" in the market.

Bongo writes:

This is phase one of Obamas plot to regulate insurance companies out of buisness then impose govt single payer.

kneejerk_response writes:

Why is it the rest of the developed world gets better health care outcomes for less price? Are their doctors better? Is their government better?

raylaw43#321876 writes:

in response to brightside:

The health insurance industry is ALREADY one of the most regulated industries in America. More goverment interference is not going to bring premium costs down. More free market competition in the industry will....I hope CA does not buck the current national consensus that is correctly rejecting govt run healthcare/increased regulation. We already have enough problems to solve in this state without making more.

"Free market pricing in the [health insurance] industry".... We haven't had that in almost 40 years, but not because of government interference but because of the insurance company monopoly.

Traditionally, all insurance policies are indemnity contracts where the insurance company agrees to reimburse the policyholder for part of the claim.

40 years ago, health insurance policies were indemnity contracts, where the insurer would reimburse the insured based upon value of procedures set by the insurance companies working with medical associations and hospital associations. Those were called "relative value schedules". They were applied mechanically. California policies specifically incorporated the "California Relative Value Schedule".

Each medical procedure had a unit value ,from office visit to surgery. Thus, for example, a hysterectomy had a unit value of 4.

The policy provided that the insurance company would pay fixed dollars per unit, depending upon the contract. Thus, if the unit rate was $25, for a hysterectomy, the carrier would pay $100 to the policyholder, regardless of the cost of the surgery, and that was after the deductible.

I have specialized in commercial law and litigation, and regulation involving the insurance industry for 43 years, and I have experienced the issues.

I have read much criticism of Obamacare, and advocacy of the "free market", but nobody has said how an insurance company in Hartford can feasibly obtain provider contracts from doctors and a hospital in Elizabethton, Tenn from which to charge a premium.

LetsBeRational writes:

in response to Havorn:

The problem is the healthcare insurers. Every year that I've been back in California since 1986, my premiums have far exceeded inflation, sometimes by five times.

Anybody notice that the CEO of United Health Care was paid $1.7 BILLION two years ago?

The doctors are getting screwed, the patients are getting screwed and the insurance companies, especially the execs are getting rich.

Take them out of the equation. Let the govt pay for qualified students' med school costs with the stipulation that their license is only valid if they complete 10 years of service working for medicare, medicaid, or some other govt rate set program and watch them line up to apply.

You are confusing United Health Care's profits with the CEO's pay. The CEO's pay was $102 million, a lot of money, but not close to $1.7 billion.

cassandra2 writes:

in response to Bongo:

This is phase one of Obamas plot to regulate insurance companies out of buisness then impose govt single payer.

What an incredible optimist!

Just_a_taxpayer writes:

in response to InsideEdge:

FIRST regulate how much the doctors/hospitals charge. Then worry about the rest. My duaghter was just in the ER at St Johns, $1500 for 4 stitches...thats right $1500 is what my health care paid them. For a grand total of 10 minutes of a doctors time and some thread. and a 10 minute return visit to remove the stitches. That makes $5 gas seem reasonable. So quit b----ing about the health ins companies. We have to get to the root of the problem FIRST!

As Scapegoat tried to explain, the $1500 paid for your daughter's care and the care of at least two other undocumented and/or uninsured people who visited the ER that day who didn't pay anything.

That is the root of the problem.

gauffrette writes:

in response to viking2265:

"Let the gov't. pay"? Please rephrase...let the taxpayers foot the bill. Where do you think the government gets it's money to pay for anything?
But if you want to support a med student, be my guest.

I believe you missed the portion of the sentence from Havorn which states "... with the stipulation that their license is only valid if they complete 10 years of service working for medicare, medicaid, or some other govt rate set program...". I believe this would be a good partial solution to also getting more doctors so that we don't have to bring them in from foreign countries.

cassandra2 writes:

in response to InsideEdge:

FIRST regulate how much the doctors/hospitals charge. Then worry about the rest. My duaghter was just in the ER at St Johns, $1500 for 4 stitches...thats right $1500 is what my health care paid them. For a grand total of 10 minutes of a doctors time and some thread. and a 10 minute return visit to remove the stitches. That makes $5 gas seem reasonable. So quit b----ing about the health ins companies. We have to get to the root of the problem FIRST!

Interesting.

My sweetie went from the ER (Sept. of 2010) to overnight observation at CMH. It was completely covered by Cigna except for a $50 copay, which he took care of on leaving.

Good ole Cigna, the firm that mastered in payment avoidance, denied the claim on the basis of his being on Medicare, which he is not eligible for, never was, and had told Cigna so on multiple occasions.

It took 10 telephone calls and many contradicting stalls and messages to finally get Cigna to pay CMH December of last year. The contract rate paid out was $3,300.

The hospital had sent us a bill for $23,820.04!

The insurance companies squeeze the providers, force them to jump hoops in order to actually collect, pull bait and switches with authorization and generally screw over everyone involved. One whistle blower on 60 Minutes I believe told of the techniques he was given to avoid payment, delay payment to medics. He even claimed he was rewarded financially for saving the company a certain amount. Do you think this might add to the cost of doing business for every one concerned?

Don't take my word; google Cigna complaints and prepare for an avalanche of material.

Some people say that government is always less efficient. It could not possibly be less efficient than the insurance behemoths.

moderate writes:

My concern is with young adults age 19 to 29 who have medical conditions but can neither afford nor gain access to reasonably priced insurance in an unregulated market. I know two young men whose prescription medications run over $1000 a month for serious conditions and are fighting tooth and nail to remain covered by their parents insurance.

VintageRacer writes:

"Chris Mooney is a journalist focused on the intersection of science and politics. An avowed liberal, he is best known for his 2005 book The Republican War on Science."

He's back (RAMOS) and plagiarizing yet again!!

http://www.thedailybeast.com/articles...

The rest of your comment is just your opinion and baseless at best

LeftOxnard writes:

Are "Premiums" just like taxes? With the exception that insurance companies will cancel you once they know there's a claim in the works! Ever look at your EOB, ridiculos.... It seems that by design what we really paying 780.00 a month for is a discount plan! I am glad that the days of insurance company rip offs are numbered!

MOR writes:

The way to get started: separate health insurance from employers. Sell it to individuals, just like car insurance. That makes the costs far more real to the person receiving the service, which is at least one big step in controlling prices and whacked out profit margins. And people who lose their jobs won't also lose their health coverage. And employers will be competing for labor based on the pay and opportunity their company offers. Large employers will no longer be able to snuff entrepreneurial efforts by delivering more heads to a health insurer. I know this smacks of fairness, which is wholly un-American, but please consider it. Libertarians support it. Moderates support it. Liberals and conservatives are against it. If that makes you think, that's good. If that makes you angry, you are the problem.

billp writes:

I'm one for free enterprise but free enterprise has completely screwed this up. If we had the single payer option, which is what health reform was suppose to be, we would be on the road to recovery. We will never get out of this hole until we turn the whole system upside down. There is no sanity as to how the medical industry charges and insurance makes it a bureaucracy. Sounds like an oxymoron, but I think government would make this simpler. Best run health plans are the government - medicare & armed forces.

Huskerfan writes:

in response to doodlesnicker86:

(This comment was removed by the site staff.)

Really? Duh. How about a sarcasm meter to help you out. You really think I meant the Southeastern Conference can make someone repay money?

Someone must have graduated from an SEC school. That's Southeastern Conference-get it-SEC?

socalmonk writes:

I don't see what the debate is about or even that it is necessary. I get my health care from the VA and it is good. Government provided single-payer and it works and costs less overall than privately offered health care insurance. Insurance companies are actually investment companies that use insurance premiums to play the stock market. That means when they run out of chips and have to leave the table we pay higher rates so they can keep gambling. They have zero interest in anybody's health. Their only interest is money. The real debate is between health care insurance and actual health care. There's a big difference, and it is breaking this country's back. I say regulate the insurance companies out of existence and let the government provide single-payer health care. What Americans need is health care, not insurance.

o_kay writes:

(This comment was removed by the site staff.)

Havorn writes:

in response to LetsBeRational:

You are confusing United Health Care's profits with the CEO's pay. The CEO's pay was $102 million, a lot of money, but not close to $1.7 billion.

As someone pointed out above I was wrong about the year, but not the payout. Who deserves that kind of money if he's not robbing not only his customers, employees, and stockholders.

I wonder how much his board of directors are paid for their quarterly meetings?
Afterall, they decide his compensation.

Absolutely egregious that someone and a board of directors, so beyond greedy, should be in charge of so many Americans' healthcare.

I'd like to see a list of how much their lobbyists paid and to whom and also their Superpac contributions.

We accuse many, many countries of corruption. Here we just call it campaign contributions.

ENVIROSCIGUY writes:

I am trying to think of ONE regulation that fixed a broken SYSTEM, but I can't. The SYSTEM needs to be changed, but we are too afraid to do it.

Nixon changed the SYSTEM (gold standard) and also imposed wage and price controls. http://www.econreview.com/events/wage...

Maybe THAT'S why we afraid of BOTH.

VintageRacer writes:

in response to ENVIROSCIGUY:

I am trying to think of ONE regulation that fixed a broken SYSTEM, but I can't. The SYSTEM needs to be changed, but we are too afraid to do it.

Nixon changed the SYSTEM (gold standard) and also imposed wage and price controls. http://www.econreview.com/events/wage...

Maybe THAT'S why we afraid of BOTH.

TheCrusader writes:

Regulate the heck outa these blood sucking parasites at the health insurance companies! Everytime they raise rates they give their CEO another couple million in compensation!

truce57 writes:

Another example of why we need a centralized healthcare system - in the same way we have publicly funded police, fire, schools, libraries.... A single-payer Medicare-for-all-style system would avoid the need for private, money-hungry insurance companies and instead treat all patients equally, with an emphasis on keeping the healthy healthy while healing the sick.

Learn more from the Physicians for a National Health Plan: www.pnhp.org

JEngdahlJ writes:

How will changes to age- and gender-rating under healthcare reform affect insurance rates? http://www.healthcaretownhall.com/?p=...

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