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State wants price controls for health premiums

March 23, 2010 12:00:00 AM PDT
Even before the historic national health care reform bill takes effect, there's concern some provisions could hurt California consumers.Consumer advocates worry about the requirement in the new healthcare overhaul that everyone has insurance, even if they have to buy it on their own.

"Nothing in the bill, shockingly, constrains what an insurance company can charge for the coverage," said Jerry Flanagan, lead advocate for health care reform for Consumer Watchdog.

California Senator Dianne Feinstein worked with President Obama to include price controls in the healthcare reform plan, but there were too many procedural hurdles.

The state Assembly Health Committee just passed a proposal that would require state approval if health insurers want to increase their premiums, the way it works now for car and homeowner policies.

"Rate hikes that are excessive, inadequate or unfairly discriminatory would be rejected," said Assm. Dave Jones (D-Sacramento).

The proposed pre-approval comes just a month after lawmakers grilled Anthem Blue Cross, forcing company president Leslie Margolin to justify rate hikes of as much as 39 percent to 800,000 California customers, despite the company's record profits.

The insurance industry opposes a pre-approval process because rate hikes are based on the cost of care.

"A bill like this does absolutely nothing to lower the cost of health insurance, which is largely driven by hospital costs, doctor costs, and prescription drug costs," said Charles Bacchi, executive vice president, Calif. Association of Health Plans.

Anthem policyholder Laurel Kaufer from the San Fernando Valley saw her premiums rise to nearly $15,000 per year, and she wants safeguards like state approval for rate hikes.

"At least there would be some mechanism in place to guarantee that the rate increases are a necessity, not just to improve the bottom line of shareholders," said Kaufer.


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