SACRAMENTO, CA – California Senate Bill 1522, which would set up insurance market standards, passed the Senate Appropriations Committee and, as of press time, is headed to the Senate for a vote.
In what has become a bipartisan issue, supporters say the bill will provide transparency to the confusing individual health plan market, while opponents say its mandates squash innovation and competition.
Interest in the bill’s fate ought to extend far beyond Sacremento. Given California’s reputation for legislative innovation, it’s likely lawmakers in other states will draw their own lessons from the outcome.
At the heart of SB 1522, said Anthony Wright, executive director of Health Access California, which sponsored the bill, is a better labeling function that classifies individual health plans into one of five tiers, from basic to comprehensive.
“The nature of these products is deceptive,” he said.
By defining plans, consumers can conduct apples-to-apples comparisons, he said. In addition, the bill would weed out “junk” insurance that would not fit in any tier, he said.
“Health plans would have to compete on quality networks,” he said, which is favorable to payers that don’t sell junk insurance and would force competition.
“Health insurers will no longer be able to sell health insurance that covers only hospital care or only physician care or that have no caps on out-of-pocket costs,” said Sen. Darrell Steinberg (D-Sacramento), the bill’s sponsor.
Sen. Mark Wyland (R-Carlsbad) opposed the bill in committee because he said it would limit marketplace choices, “which will lead to higher costs and premiums and will ultimately be a disservice to consumers."
He said increasing consumer access and choice would better achieve SB 1522’s aim.
“SB 1522 mandated a one-size-fits-all approach to California’s healthcare coverage needs,” said Sen. Sam Aanestad (R-Grass Valley). “Requiring all health plan contracts and coverages to fit into five specific categories would have put an end to market innovation and customization of healthcare plans.”
Aanestad supports transparency in actual provider rates that are charged to consumers and health plans to enable comparison shopping.
Kaiser Permanente is “still reviewing the bill,” according to a spokesperson, while Blue Shield of California has not taken a position on SB 1522, said spokesperson Elise Anderson.
However, Anthem Blue Cross opposes the bill. In a letter to Senator Tom Torlakson, chair of the Senate Appropriations Committee, Michael Paiva, regional director of government relations for Anthem Blue Cross, said the passage of SB 1522 would result in increased state costs to regulate and administer.
Do you think SB 1522 provides better information to consumers, or will it stifle innovation, as its detractors say? Tell us what you think -- email your views to editor@healthcarefinancenews.com.