This article was first published in
today’s Los Angeles
Daily News
Despite
alarm raised in many corners over costly new regulations, the California
Legislature is pursuing AB 52 to clamp new regulations on health insurance
premiums.
The
purpose of the bill, according to the author, Assemblyman Mike Feuer, is to
control dramatically rising health care costs by giving state regulators the
authority to deny or moderate proposed insurance premium increases.
Once
again a measure that purportedly is designed to protect consumers ignores the
cost of doing business. Ironically, the increased cost of regulation will find
its way to the consumers either through increased costs or reduced services.
The
bill’s intent to control premiums carelessly ignores the underlying problems of
rising health care costs, such as the cost of new technologies.
Unless
some check is put on the driving force behind health care costs, reducing
premiums will only serve to limit services.
If
an insurance company cannot afford the rising costs of health care across-the-board
with premiums limited by government regulation, the insurance companies would
undoubtedly restrict medical services and pay only what they can afford.
Beside
this practical business reality, there are other costs built into AB 52.
The
measure authorizes the imposition of fees on health care service plans and
health insurers for purposes of implementing the program. These fees will be
deposited in a newly created fund — read: new bureaucracy.
The
bill creates new proceedings for reviews of proposed premium increases, which
entail more time dedicated to paperwork and hearings that will add to costs.
Health
insurance premiums already face extra hurdles before they can be levied. A new
state law, SB 1163, requires health plans to have an independent actuary
certify that premium increases are necessary and justified. It allows the
Department of Managed Care and the Department of Insurance new powers to review
rate changes.
In
addition, new federal law requires that 80 to 85 cents of every dollar of
premiums go to medical care. Opponents of AB 52 point to a
PricewaterhouseCoopers’ analysis that 87 cents out of every premium dollar
already goes to medical services.
And
while the price of health insurance remains out of reach for too many
Californians, a new Kaiser Family Foundation study shows that Californians pay
less than the national average for individual health insurance and the second
lowest rates among the 43 states surveyed.
AB
52 would not simply add more government regulatory power over health insurance
companies, but it would also open the door to private bounty hunters to go
after insurance companies while enriching themselves.
The
bill has an intervener provision that allows outside attorneys to press claims
against insurance companies and get paid for doing it. Such legal costs add to
the bottom line for insurance companies and these costs are passed on to
consumers.
You
have to wonder if AB 52 is a stalking horse for a government, single-payer
health care plan?
The
California Alliance for Retired Americans put out a document, which says in
part: "Until California has Single-Payer, Medicare-For-All healthcare, we
will be subject to the wasted cost of health insurance companies, which provide
no value and immeasurably complicate health care delivery."
Whatever
AB 52’s true intent, the real world consequence will be more regulation, higher
costs and little progress toward solving the problems associated with increased
medical costs.