State Consumer Group Proposes New Approach To Health Insurance Rate Hikes

SAN FRANCISCO (KCBS) -- Jamie Court is president of Consumer Watchdog, the non-profit organization that has launched an initiative drive to give state regulators the power to approve or reject health insurance rate hikes.

Over the past decade, while inflation has risen 29 percent, health insurance premiums for employers have gone up 153 percent according to his group's statistics.

Consumer Watchdog is now looking to change the rules of the game.

KCBS' Rebecca Corral Reports:

Currently regulation states that home and auto insurance companies have to ask permission to raise their rates and justify the price hike. But for health insurance companies, the rules haven't exactly been quite as stiff.

"Health insurance companies now can raise rates as much as they want as long as they say on the books; they're not spending more than 15 or 20 percent on administrative and overhead costs," Court said over in an over-the-phone interview.

"A majority of the states require health insurance companies to prove the rate hikes are necessary to get approval before the rates go up. We don't do that in California and that's what this initiative does," he added.

Once the initiative is approved for circulation, Consumer Watchdog will have 150 days to collect half a million voter signatures to make it onto the November ballot.

"This initiative is all about transparency and accountability," Court said.

He claimed the foundation of the initiative is requiring that health insurance companies meet the same standard that auto and home insurance companies have.

However, there are some naysayers. Representatives for the insurance industry called the initiative proposal flawed and that Consumer Watchdog is just doing this to get money for the organization.

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