Friday, July 12, 2013

California Bill Would Force Insurers to Disclose Reasons for Rate Increases

Finally, a Bill from Mark Leno that doesn't repulse me. That is exciting.  We sorely need this kind of law in California.  It is the sort of legitimate use of government necessary to assist in the free market-ization of an oligopoly.  
Despite opposition from insurers, the Assembly Committee on Health last week approved a bill designed to lower health insurance premiums by requiring plans to disclose more information about their rates.
SB 746 by Sen. Mark Leno (D-San Francisco) would require insurers selling coverage to employers with 50 or more employees to provide more detailed information about how and why they raise health insurance rates.
Leno said the bill was prompted by a recent dust-up between San Francisco unions and Kaiser Permanente. Union officials asked Kaiser for data and reasons for rate increases. Leno indicated he has not been satisfied with the insurer's response.
Leno said greater transparency from insurers could help drive down costs because the public release of insurance costs on the Department of Managed Care website would open up avenues for the public to ask more detailed questions about rate hikes.
"The need for the transparency, of course, is for us to better control the ever-escalating costs of health care in this country," Leno said. If the state can better understand the reasons for rate increases, Leno said, it would mean the state and consumers could pressure health plans to modify those increases.
"This bill would require all health plans to publicly disclose aggregate information about the rates for large purchasers," Leno said.
Health plans pushed back, arguing that determining why rates are going up is complicated. 
[I dare you to re-read this sentence aloud slowly and not laugh out loud.  Rate increases are complicated so we should be forced to try and explain them.] 
Charles Bacchi, executive vice president of the California Association of Health Plans, called the bill unnecessary and expensive.
"Health care plans are in the middle of implementing the most important changes to our health care system since Medicare," Bacchi said. "There's much to be done. We're focused on getting that done and we think we should be spending our time focusing on the Affordable Care Act."
The ACA, he said, didn't require rate review on large group coverage," so Bacchi said he sees "no urgency why we need to amend California's rate review law today as proposed."
Leno pointed to a previous bill he authored, SB 1163, passed in 2010, which carried similar requirements -- but only for small business and individual health insurance plans.
"We know that transparency works," Leno said. "[SB 1163] required that, before plans increase rates, they had to notify the [Insurance] Commissioner and give their reasons for doing so. We're told that within the first two years, as a result of that bill, over $300 million has been saved."
"This bill would do the same thing for large purchasers of health insurance," Leno said.
Teresa Stark, a legislative advocate for Kaiser Permanente, said Leno's proposed bill would unfairly single out Kaiser.
"Make no mistake, this bill is all about Kaiser Permanente," Stark said at the July 2 committee hearing. "This bill is trying to get us to behave like an insurance company."
Stark pointed out Kaiser's role as both a hospital group and an insurer.
"When we say we are different, we really mean we are different," she said. "We are an integrated health system -- we're not just a health insurer. We have hospitals, we have professional medical staff, we pay salaries, we build hospitals, we buy land. So because of that, we budget and plan and forecast more like a provider and as a health care delivery system."
Stark said Kaiser should not be required to report information about rate increases in the same way as other health insurance plans.  
[Yeah, not for profit health plans should not be forced to explain why they ask for double digit rate increases!  Question, if the increases are justified by legitimate business needs, why all the resistance to explaining them?] 
Trying to "force us to report information in the same fashion as other health plans, which is what this bill would do, basically breaks us apart at the seams," she said.
[Translation: if the public sees how this sausage is made they surely won't want to eat it any more.] 
"This bill is meant to send a message to Kaiser Permanente," Stark said. "The message is: 'Kaiser, you're doing it wrong. You're not communicating with your customers appropriately and you're not communicating with your regulators, and we have a better way for you to do it.' That message is very disturbing to my company."
Although SB 746 may have been sparked by complaints about Kaiser, Leno said it applies to all health insurance plans covering 50 or more individuals in a group plan.
"This bill will no longer target any particular health plan," Leno said. "Instead, it provides health plans with options providing greater transparency in health insurance costs for large purchasers. That's really what this bill is all about -- transparency."
Specifically, the bill would require all large group insurers to disclose in an annual report to the DMHC specific reasons why insurance rates are raised. It would also require large insurers to provide more detailed information about products they're selling.     
And SB 746 would force large group health plans to hand over details about changes in the utilization and cost of health insurance products -- data that health plans use to raise rates....
The Assembly health committee approved SB 746 in a 12-6 vote. The bill moves to the Assembly Committee on Appropriations, where it likely will be heard sometime in August after the summer recess.