Thursday, July 7, 2011

Crappier Health Insurance Coming Soon to California?

We sure hope that Californians are ready for some changes to their health insurance. Changes like higher copays and deductibles, and fewer choices in doctors and health plans. Because these changes just took another step toward becoming reality, with the Senate Health Committee's conditional approval of AB 52. This bill, if passed by the full Senate, will give California's Insurance Commissioner and the Department of Managed Health Care broad new authority to reject increases in health insurance premiums that it views as "excessive." It heads now to the Appropriations' Committee, where some advocates are concerned that it might contain amendments that will weaken its regulatory mechanisms.

We've already written about this bill, identifying two big problems along the way. First, there's a technical problem related to Obamacare: with the state negotiating insurance plan premiums as part of its Health Benefit Exchange, what happens if someone complains to the regulators that a state-negotiated premium is unfair? In other words, could the state really rule that a rate it negotiated was improper, and if not, how can it be legal to effectively exempt one portion of the market from regulation? But the second problem is more serious: health plan premiums are climbing steeply these days because the underlying cost of providing insurance is accelerating. In typical fashion, Sacramento believes it can legislate away the realities of the market, but the result of rejecting rate increases will most likely include greater patient cost-sharing, in the form of higher copays and deductibles, lower payments to hospitals and physicians, elimination of covered benefits, and insurers pulling out of California altogether.


  1. The successful destruction of the health insurance market will augur in demands for socialized health care.

  2. Which will then create new demands for private alternatives or cash payment for services, if, well, every other country with socialized medicine is any indication.