Rate review bill advances in California

HHS awarded an initial round of $1 million rate review grants to every state that applied, though department officials have said future awards will require a more rigorous application with tougher metrics for demonstrating a tangible plan to strengthen rate review. Some states said in their applications that they would consider legislation like California’s, giving them the power to review all rates before they take effect. A handful of other states, including Massachusetts, already have prior-approval laws on the books but have rarely invoked their power to block rate hikes from taking effect.

In California, public pressure — including criticism from the White House — led the state’s Blue Shield plan to delay a proposed rate increase last month. But Carmen Balber, Washington director for the advocacy group Consumer Watchdog, said Blue Shield customers in the state have still seen cumulative rate increases as high as 86 percent over the past two years, and that giving state officials the power to review increases before they take effect is the only way to prevent such hikes.

Insurers have strongly resisted most rate review proposals, including bills to establish federal review, while agreeing that some form of disclosure would bolster their argument that rising premiums have less to do with profits than with rising payments to doctors, hospitals and drugmakers. 

The California Association of Health Plans criticized the California bill as unnecessary. 

“At the same time the Legislature is being forced to make deep spending cuts in essential programs, (this bill) will create an expensive and expansive new bureaucracy in the offices of the state insurance regulators and impose burdensome new requirements that will further increase the cost of coverage,” the group said in a statement Tuesday.

Clarification: This post was updated at 6:25 p.m. to clarify which plan delayed a proposed rate increase.