Regulated Health Insurance Initiative—What Prop 103 Did to Auto Insurance Rates--on California 2010 Ballot?

By David Dayen
d-day

It looks as if the Foundation for Taxpayer and Consumer Rights is planning on going to the ballot in 2010 with a proposal to basically do to the health insurance industry what Proposition 103 did to the auto insurance industry.

“We are going ahead with this,” said Jamie Court, president of the Santa Monica-based Foundation for Taxpayer and Consumer Rights. “The only thing that would block this is if the single-payer (universal health care) folks want to go ahead and go to the ballot, or if a new president wants to do something more ambitious. In that case, we would back off.” [...]

The plan would remove HMOs from the regulatory authority of the state Department of Managed Health Care, which is headed by an appointee of the governor, and place them in the California Department of Insurance, which is run by a publicly elected commissioner. It would order HMOs and others to get their rates approved in advance by the state and force them to justify those rates; rates judged to be “arbitrary or capricious” would be thrown out. Rescinding coverage after an illness sets in would be outlawed. Extra costs for special services, the so-called “out-of-pocket maximums” — would be capped, as would prescription drug costs. Patients would not be penalized for changing doctors or care plans. The HMOs and others would be required to submit detailed financial information to state regulators, who would have the authority to penalize companies for violations and seize and operate companies whose fiscal condition was suspect. There would be language making it easier to sue HMOs and others, and those who bring lawsuits in furtherance of the initiative would be compensated for their time — as in Proposition 103.

This would spark maybe the most expensive initiative fight since Prop. 87 in 2006. In general, if you're going to remain with a for-profit health insurance system, then regulating it to provide for the fairness of California citizens seems apt. Prop. 103 has somehow not left Californians without car insurance. This is a valuable market for that industry, and the same with health insurers.

This could get interesting...

Dave is a writer, comedian and TV/film editor based in Santa Monica. He is an elected member of the Democratic State Central Committee from the 41st Assembly District. He blogs on state and national politics at http://d-day.blogspot.com/

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