This board does not endorse Proposition 45 for the Nov. 4 ballot.
This measure would give the state insurance commissioner the ability to review and approve health insurance rates for individual and small group plans, striking down those that are excessive or unfair. The commissioner already has the power to review and strike down rates for auto insurance after the passage of Proposition 103 in 1988, which has saved Californians a considerable amount of money on auto insurance.
We support giving the state insurance commissioner the ability to extend his oversight powers to health insurance premiums. But Proposition 45 is not the way to accomplish that.
The measure is deeply flawed and fails to account for changes to California’s health insurance market wrought by the Affordable Care Act and the creation of Covered California, our state’s individual exchange market.
As an individual exchange market, Covered California negotiates prices with health insurance companies and gives consumers the ability to compare plans side by side. Throwing on another layer of regulation could disrupt the negotiated agreements Covered California is making with health insurers and ultimately undermine the effectiveness of the Affordable Care Act.
This is particularly true because all of those regulations would have to be sorted out and implemented in a very strict timeline. Health care premiums differ from other types of insurance in that they are set only once a year, and consumers only have one window of time – the state’s annual open enrollment period – to sign up for their plans.
If Proposition 45 succeeds, there is a plethora of bureaucratic steps that must be taken to implement the new regulations before the open enrollment period begins. This lengthy process would require the insurance commissioner to review and approve or strike down rates after Covered California finishes negotiations with health care providers.
But the initiative fails to provide a timeline for the insurance commissioner to follow, and that lack of structure creates the potential for chaos in an already precarious system.
It’s still early, but so far, Covered California seems to be an active marketplace that’s succeeding in holding down rates for consumers. Adding another layer of regulation that does not consider the effects of the independent exchange could derail Covered California’s progress.