Make Health Insurance Companies Justify Their Rates
2014 INSURANCE RATE PUBLIC JUSTIFICATION AND ACCOUNTABILITY ACT
Frequently Asked Questions
This ballot measure will require health insurance companies to publicly justify and get approval for individual and small
employer rate increases before they take effect.
Does this ballot measure undermine the Affordable Care Act (ACA)?
• Not at all. Rate regulation is consistent with the reform goals of the ACA. The ballot measure was written after the
ACA passed and takes into consideration all provisions of the law.
• Supporters of ACA Wanted Rate Regulation in the ACA: President Obama and Senator Feinstein tried to include rate
regulation authority within the ACA as it was going through Congress, but the health insurance lobby defeated that
proposal. After passage of the ACA, HHS Secretary Kathleen Sebelius spoke favorably of states passing laws to regulate
health insurance rates. Rate regulation is a missing piece of the ACA.
•35 States Have Implemented Health Insurance Rate Regulation with the ACA: 35 other states have enacted health
insurance rate regulation authority for the individual and/or small employer markets. The ACA is being implemented by
the states themselves in all the states with health insurance rate regulation.
• ACA Included Grant Money for Rate Regulation: The ACA even provided grant money to states to implement rate
regulation. California is not eligible for this ACA grant funding because we lack the authority to regulate health insurance
Will the ballot measure hurt Covered California, the state’s health benefit exchange?
• No. Rate regulation exists in 35 states along with state exchanges and the federal exchange. Rate regulation makes
health insurance sold in the Exchange more affordable. For example, Massachusetts had an exchange for years and rates
kept climbing. Massachusetts enacted rate regulation because an exchange alone cannot rein in excessive rates. Even
with Covered California, rates are continuing to rise in California.
• Experience Shows that Rate Regulation Will Not Cause Delays or Confusion and Will Make Covered CA More
Affordable: This past year (2013), individual and small employer rates were filed with the Department of Insurance
(CDI), Department of Managed Health Care (DMHC), and Covered California. Both Departments completed their reviews
in time for Covered CA. CDI negotiated lower rates for Covered CA than Covered CA had gotten initially. Rates would
have been even lower with actual rate regulation by CDI instead of just review and negotiation. There were no delays
and there will be no delays with rate regulation.
• Health Insurers’ “Study” Full of Inaccuracies and Omissions: The health insurers paid $50,000 for a “study” to attack
the ballot measure. The “study” totally ignores the fact that both CDI, DMHC, and Covered CA had no delays last year
with health insurance rate filing intervenors. The author of the “study” did not contact CDI to verify its figures, which
are wrong. The experience with existing rate regulation for auto and home insurance shows that there are intervenors
in only 0.2% of rate filings. And, there have only been two intervenor hearings since 2008. Had the health insurers’ paid
consultant bothered to talk with experts at CDI, he would have learned that intervenors and hearings are rare and that
health insurance intervenors last year caused no delays for Covered CA.
Why doesn’t the ballot measure include rate regulation for large employers’ health insurance?
• Taking the First Step: Repeated efforts to regulate large employer health insurance rates have been killed by the
health insurers. The only way to regulate large employer health insurance rates is to first pass this ballot measure and
take this first step. Once this ballot measure passes, the political dynamics will change. No longer will health insurers be
able to block us from expanding rate regulation to large employers in the Legislature.
• Administrative Costs: The Department of Insurance already receives individual and small employer rate filings and
already has the resources to review them. If large employers’ health insurance were included, there would be tens of
thousands of new rate filings. This would drive up administrative costs and open the ballot measure to attack on these
grounds by opponents.
• Opposition Hypocrisy: Health insurers killed in the Legislature four separate bills authored or sponsored by
Commissioner Jones to regulate large employer health insurance rates. In addition, health insurers got 2013 legislation
that would have required large employer rate review vetoed, and just recently testified in opposition to the 2014 large
employer rate review legislation. After killing year after year all legislative attempts to regulate large employer rates,
now opponents are complaining hypocritically that the ballot measure does not include large employer rates.
Will the ballot measure result in raised rates for unions?
• Cost Shifting Not Permitted: No, it will not result in raised rates for unions. Health insurers set rates separately for
individuals, small groups, and large employers and unions. Under the ACA and state law, rates for individual and small
employer health insurance are based on the overall risk pool for each of these markets and adjusted for geographic
region, age, and family size. Large employers and unions rates are based on the health risk of the employees of that
group or union.
• No History of Cost Shifting: Most of the 35 states that have given their Insurance Commissioner the authority to
regulate health insurance rates have done the same thing as the ballot measure – provided that authority for individual
and small employer rates only – and there is no evidence of cost shifting to large employers and unions in those states.
• State Building and Construction Trades Council: The Trades Council is worried about cost shifting, but as evidenced
above – including the fact that cost shifting is not permitted nor has there been a history of it in other states – their
concern is misplaced. We agree with the Trades Council that all plans should be covered, which is why Insurance
Commissioner Dave Jones authored and sponsored 3 different bills over the past six years that included large group
plans. All of them were killed by the insurance lobby. We decided to take the current version to voters as a crucial first
step, and are committed to using this victory for consumers to push the State Legislature to make all health insurance
companies justify their rates. We look forward to working with the Trades to accomplish this.
• Union Support: Unions in support of the ballot measure include the California Federation of Teachers, California
Nurses Association, California School Employees Association, Northern California Carpenters Regional Council, Orange
County Employees Association, and United Teachers Los Angeles. These unions are in support because they and
Commissioner Jones – who, as a State Assemblymember, had a 100% lifetime labor voting record from the California
Labor Federation and has been a longtime advocate for workers’ rights – know that this ballot measure will help bring
down costs for California’s working families.
To sign up and for more information, go to www.justifyrates.org
or contact [email protected]
Computer generated / Printed in-house