SACRAMENTO (CBS / AP) — Democrats in the California Assembly on Thursday narrowly approved giving state regulators the power to reject rate hikes proposed by health insurers, voting after Republican lawmakers walked out of the chamber in protest.
The Assembly voted 42-1 to approve the measure, with one Democrat voting no and others speaking against it. The bill, which needed 41 votes for approval, now goes to the Senate.
AB52 allows the state insurance commissioner or the Department of Managed Health Care to reject increases in health insurance rates if they are deemed excessive. The commissioner already can reject rate hikes for other kinds of insurance.
California — the most populous state in the nation, with nearly one out of every eight U.S. residents — is a huge market for insurers. The state represents 11 percent of the market for those with health insurance through an employer and 15 percent of those with individual coverage, according to Kaiser Family Foundation data.
The bill would impose new regulatory oversight on policies covering 17.5 million Californians.
Assemblyman Mike Feuer, a Los Angeles Democrat, said 34 other states have similar rules to protect consumers from rates that are rising faster than health care costs. “Let’s remember who we’re here to represent,” he said.
Assemblyman Bill Monning, a Monterey Democrat, said the bill would require that rate increases be supported by financial data.
“We do it for other forms of insurance in this state,” he said. “Rates should be based on objective criteria,” he said, not the assertions of a profit-making company.
Opponents said it would warp the market, reduce access to care and doctors, be subject to politics and undercut other cost-control efforts.
Assemblyman Charles Calderon, D-Whittier, initially said he couldn’t support the bill and noted that some of the states that allow regulators to reject increases have among the highest individual rates in the nation. Health insurers have offered studies showing that five of the 10 states with the highest individual rates have similar regulation laws.
In addition, Calderon said, politics should be separated from regulation.
“What politically elected representative is going to make an unpopular decision on what the rate is going to be?” he asked.
Insurance Commissioner Dave Jones, a Democrat who was elected into office, said in a statement that “since I took office, Californians have made it exceedingly clear that they want me to reject excessive rate increases, but I do not have this authority.” Regulators have faced off with insurers — such as Blue Shield of California and Anthem Blue Cross — over rate increases they branded as excessive, but had to apply pressure through public campaigns rather than having the power to reject them outright.
“As a member of the Assembly, I introduced this legislation three times and the need for it has only grown, as health insurance continues to become unaffordable for more and more Californians and businesses,” he said.
The debate did not include any Republican lawmakers, who requested a recess for a caucus just before the bill came up. When it was denied, they left the floor for about 30 minutes.
After they returned, they added their votes to the tally against the bill and blasted Democrats.
“As a rural doctor, I’ve seen firsthand that letting government fix rates in California does nothing to make health care more affordable, and instead hurts access to care,” said Assemblywoman Linda Halderman, R-Fresno, who is a surgeon.
The GOP argued that Democrats have helped drive up the cost of care in California with bills that require new kinds of coverage.
“Our focus should be making health care more affordable for employers and workers alike, not increasing costs that will drive even more jobs and opportunity away and make our health care problems much worse, said Assemblyman Dan Logue, R-Linda.
Health insurers lobbied hard against the bill. The California Association of Health Plans has argued that it’s misguided to regulate health rates when 87 cents out of every $1 spent on insurance premiums goes for medical expenses, while only 3 cents goes to profits. The group blames chronic disease, new technology and other pressures for driving health care spending up faster than inflation, but says AB52 applies only to premiums, not the underlying cost pressures.
“Today’s contentious vote is further evidence that AB52 is a misguided effort that will limit access to health services and increase costs,” said association president and CEO Patrick Johnston.
Opponents also argued that rate regulation will cost the state some $30 million a year to administer, and will be a rich source of lawsuits that add to the costs of doing business for insurers and insurance customers alike. The bill has racked up a long list of business groups and the California Medical Association among its opponents.
The only vote against the measure on the Assembly floor was Assemblyman Richard Pan, D-Sacramento, who is a physician.
Assemblyman Jose Solorio, a Santa Ana Democrat, raised concerns about the opposition to the measure by doctors. Solorio urged Feuer, who presented the bill, to be open to amendments as the legislation moves to the Senate.
Neither Calderon nor Solorio voted on the bill initially. Lawmakers are allowed to modify their votes after the vote on the floor, and by mid-afternoon Calderon and two other Democrats had changed their votes to ‘yes.’
The tally Thursday afternoon stood at 45-28. The entire GOP caucus voted against the bill. Pan was the only Democrat opposed. And seven Democrats did not vote.