New bill to regulate California insurance hikes


Many plans are increasing their rates Friday, with no obligation to justify the increases. The latest rate hike by some of the state's largest health insurers affects 1.5 million Californians; mostly small business and individual policyholders.

The premium jump ranges from as small as 3 percent to a whopping 92 percent. For some customers, it's the third rate hike in less than a year.

"I have the authority right now to reject excessive rate hikes for auto insurance, homeowners insurance, property insurance, casualty insurance, but not health insurance," said California Insurance Commissioner Dave Jones.

The health insurance industry says the rise in rates reflects a rise in health care costs, including increased hospitalizations and diagnostic testing.

The premiums have gotten so bad that 56-year-old Pam Suwinsky decided $700 a month for just herself was too expensive, so she cancelled her health insurance.

"I decided it was worth that risk," said Suwinsky. "I really didn't understand why they would go up so much. There's no change in my health status, and I wasn't getting additional benefits."

The increasingly expensive policies are giving momentum to Assembly Bill 52, which grants the insurance commissioner the power to reject rate hikes.

But the California Medical Association says price controls may not be the answer because the insurance industry will find a way to keep their record profits that in the end will hurt consumers.

"One of the ways to generate profits is to make cuts in the way they provide healthcare," said Francisco Silva from California Medical Association. "Which means less access to physicians, less access to care and less benefits."

"They are charging more than is necessary to cover medical costs," said Jones. "It's going to drive more people off the health insurance rolls and more people into our emergency rooms."

AB 52 faces a key committee vote on Wednesday. Nearly three dozen states already give their insurance commissioners the power to reject rate hikes from the health insurance industry.

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