In California, insurers and regulators are fighting for control of the post-reform insurance market.
As Californians consider how to vote on a November ballot proposal that would empower the state insurance commissioner to veto premium increases, commissioner Dave Jones is being sued by UnitedHealth Group, in a dispute over a $173 million fine dating back nearly a decade.
The new rate review process would expand on existing transparency and public review requirements and let the state reject health insurance premium increases, which Jones describes as a "missing piece of the Affordable Care Act."
The proposed policy would apply to commercially insured residents, including the 1.4 million and growing in the state insurance exchange, Covered California, and about 4.5 million residents enrolled in individual and small group plans. It's sponsored by the group Consumer Watchdog, with support from the California Nurses Association and the California Public Interest Research Group, who argue that a rate veto for the public is needed to fully insulate the market from "unreasonable rate hikes," as CalPIRG said.
An industry consortium called Californians Against Higher Health Costs, led by WellPoint's Anthem Blue Cross with support from the state health plan and medical associations and others, is leading a public advertising campaign to try to convince residents to reject the idea of adding more regulations to the current, developing ACA market.
The new policy would give "a single elected politician" -- insurance commissioners are elected in California -- "almost total control over our health insurance," and would add "another layer of regulation over a market sector historically overseen by the Governors' Department of Managed Health Care," the group said in a media release.
Meanwhile, UnitedHealth Group company PacifiCare Life and Health Insurance is suing to challenge a $173 million fine the insurance commissioner has imposed for problems and violations that occurred in the integration of the $9.3 billion acquisition in 2005.
While the commissioner cited some 900,000 violations that were associated with the integration, the company says the problems "involved largely technical and administrative issues" related to claims and membership management dating back to 2007. Those issues have been corrected and the fine set by Jones is excessive, the company argues, noting that a state administrative law judge recommended an $11.5 million fine in 2013.
"By treating errors in standard health insurance paperwork more severely than errors directly affecting patient health or the integrity of their policies, the Commissioner threatens to make California's health care system slower, less efficient, more bureaucratic and more expensive," PacifiCare said in a media release.
The dispute and the rate approval proposition are not affecting the plan submission for the 2015 plan year, but with the second enrollment period coming up for the public exchange, the vote adds a bit of uncertainty for 2016 and beyond. The California Association of Health Plans warns that the new layer of regulation could discourage insurers from participating, especially in the new individual market.
If the proposal for rate approval wins at the polls this fall, California will become the 36th state with a rate approval process. First elected in 2010, Jones has tried to accommodate the health insurance industry in the transition to the ACA-regulated market, offering small employers the option to renew existing plans for one additional year.
Under a new law sponsored by Jones, small employers on non-grandfathered plans purchased before December 31, 2013 can renew their policies for one year.
"While many small employers will move to new health insurance options right away, SB 1446 provides additional choices to those who choose to use the transition period," said Jones in a media release.