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California Health Insurance Bill Heads to Vote:

Will Health Coverage Premium Hikes See More Regulation?

July 2011

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Thirty four states in the US allow insurance regulators to deny health coverage premium hikes that seem excessive. Now, if bill AB52 is passed, California health insurance will also fall into that category.

It's been a hotly contested debate punctuated by emotional testimony from men and women who cannot bear the economic burden of health coverage today. Rate hikes for California health insurance first gained notoriety last year, when a proposed increase in coverage costs of almost 40% gained national attention and fueled the passage of the health care bill.

This year rate hikes of 16% were instituted by major insurance companies, even as regulators called it excessive and unnecessary. Many of these same health insurance companies also posted record profits both last year and the year before, even as Americans struggle with a sagging economy and job loss.

The bill would allow insurance regulators to veto a health coverage premium hike that seems far above the rate of medical inflation, currently predicted at about 9%.

Critics of the bill argue that limiting the ability of health insurance companies to charge what they see fit will lead them to cut back on reimbursements to doctors. Doctors, in turn, will not be able to treat the poor, who are often subsidized by medical costs paid by those with insurance.

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California Health Insurance

Did you know...
insurance companies can raise premiums for health coverage to any amount they want?

There is also concern that insurance regulators would wield too much political power. The health coverage industry in California accounts for a large percentage of insurance profits across the US, making the stakes high for insurance companies who sell coverage there.

Supporters of the bill argue that California health insurance costs should be regulated by someone other than the health insurance industry.

Whether or not the bill passes will also be influenced by the so-called "poison pill" amendments that could weaken regulatory power over insurance agencies.

The bill is set for the vote this Wednesday

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