California Assembly Passes Health Insurance Rate Regulation Bill 44-7

Legislation To Rein In Health Insurance Premiums Could Save Californians Billions

SANTA MONICA, Calif., June 2, 2011 /PRNewswire-USNewswire/ -- With only seven lawmakers voting against the hotly contested measure, the California Assembly has passed AB 52 (Feuer), which would subject health insurance companies to the same kind of vigorous rate regulation currently in place for auto and homeowners insurance companies in California. Prior to the vote the entire Republican caucus walked off the floor of the Assembly, and the only Democrats who spoke against the bill, Assemblymen Calderon and Solorio, did not vote on the measure. At last count, 44 Democrats voted in support of the bill; six Republicans and one Democrat were the only lawmakers to vote with the insurance lobby opposing the bill. The remaining Assembly members abstained.

"Californians want health insurance companies to be reined in and regulated, and California lawmakers know that," said Consumer Watchdog's Executive Director Doug Heller. "Even the politicians siding with the insurance industry did not want to register a no vote that would make their constituents wonder why they voted against health insurance reform."

AB 52 would require insurance companies to get permission before implementing any hike and would allow state regulators to deny or modify rate changes determined to be excessive. The bill would enact rules similar to Proposition 103, which requires the Insurance Commissioner to regulate auto and other property/casualty insurance rates. Under those rules California motorists have saved more than $62 billion on their auto coverage over the past two decades, according to a 2008 report by the Consumer Federation of America.

"Californians have no reason to believe that insurance companies will stop ripping us off voluntarily," said Doug Heller, Executive Director of the nonprofit Consumer Watchdog. "State regulators should have the power to block excessive health insurance rates, and, today, California lawmakers took a huge step in that direction. We applaud Assemblyman Mike Feuer and the Assembly leadership for their tireless effort to pass the most significant consumer protection law of the year."

Over the past year, health insurance policyholders in California have seen massive rate hikes, even as medical inflation has been fairly low. Consumer Watchdog noted that these skyrocketing rates have coincided with ever-increasing profits for insurance companies.

AB 52 authorizes insurance regulators to review insurance company profits and overhead as well as company projections about future health care costs in order to determine whether or not to allow a rate increase to take effect. It also allows members of the public to challenge proposed rate hikes. Not surprisingly, Anthem Blue Cross and other insurance companies aggressively lobbied to defeat AB 52, but lawmakers showed today that the status quo is unbearable for California consumers and reforms are needed. In 2014, federal law will require all Californians to purchase health insurance, making the oversight and regulation of insurance rates even more urgent.

"Over the last few years investigations have found insurers overestimating future medical costs and padding premiums. If we're going to force everyone to buy insurance, we better make sure the companies that sell it aren't allowed to gouge us," said Consumer Watchdog's Heller.

Consumer Watchdog is a non-partisan public interest organization with offices in Santa Monica, CA and Washington, D.C. For more information, visit is on the web at http://www.ConsumerWatchdog.org.

SOURCE Consumer Watchdog