The California state government has two main ways of monitoring health insurance rates: One, Covered California can “negotiate” rates with health insurance companies, and two, the California Department of Insurance or Department of Managed Health Care can “review” rates and point out rate hikes they find unreasonable, although they have no executive power to strike the rates down.
Both of these procedures lack sufficient regulatory power to prevent the kinds of overwhelming increases in health care premiums we’ve seen over the last decade. Since 2002, health insurance rates in California have risen by 185 percent, five times the rate of inflation. Proposition 45 provides necessary regulation for individual and small business insurance plans by allowing California’s insurance commissioner to reject excessive rate increases and giving public interest groups the ability to challenge rate hikes in court hearings.
Given the Affordable Care Act requires that everyone buys health insurance, the government must ensure that insurance companies cannot exploit the new pool of working class consumers. Proposition 45 will help to provide this crucial consumer protection. Opponents of Proposition 45 argue that the initiative will interfere with Covered California’s rate negotiations with insurance companies. However, Covered California has no real enforcement authority and many of its bureaucrats are former insurance company employees with little incentive to prevent rate hikes. Back in 1988, California voters passed Proposition 103, which provided the same rate regulation for auto insurance that Proposition 45 provides for health insurance. Proposition 103 has saved Californians an estimated $102 billion in auto insurance. With Proposition 45’s passage we will likely see similar savings in health care insurance, giving individuals across the state some much-needed peace of mind.
Frost is a fourth-year political science student and president of the Bruin Democrats.