Health insurers in the nation's largest market are breathing a collective sigh of relief after escaping a new rate review system, but they may have to fight the battle again.
Sixty percent of California voters decided to reject Proposition 45, the Insurance Rate Public Justification and Accountability Act, an initiative that would have empowered the state insurance commissioner to review and veto individual and small group health plan premiums.
The proposal, sponsored by Consumer Watchdog, would have made California the 36th state with regulatory authority to reject premiums -- a power that California insurance commissioner David Jones called the "missing piece" of the Affordable Care Act.
While polling suggested the public might support the measure, a coalition of healthcare and business associations funded largely by insurers, Californians Against Higher Health Care Costs, succeeded in convincing voters that the new regulatory authority would be duplicative and unnecessary.
California's Department of Managed Care already reviews health plan premiums, networks and benefits, and for the new and growing subsidized market, the state exchange Covered California conducts its own negotiations with insurers on behalf of consumers -- one reason why exchange leaders never endorsed the measure.
Although Covered California's executive team and board never officially came out for or against the proposition, they did raise a number of concerns, arguing that an insurance commissioner's rate review could interfere with the exchange's "active purchasing" model of negotiating rates and networks with insurers and open enrollment deadlines.
Covered California officials have pointed to exchange's success in garnering both a diversity of choices from insurers and fairly affordable rates, with exchange plan premiums for next year set to increase a modest 4 percent on average.
The organizations behind Californians Against Higher Health Care Costs praised the results of the vote. "Voters fundamentally rejected the concept of giving one politician the power to determine health care benefits and rates," said Allan Zaremberg, president of the California Chamber of Commerce.
It is still possible, though, that the California legislature could take up the cause of rate review.
Since 1988, California's insurance commissioner has had the ability to reject rate increases for auto, home, property and casualty insurance, and commissioner Jones, who was reelected to a second term, still believes that power should be deployed in health insurance. "Health insurers should not be able to set [their] own rates without first publicly justifying the rate and getting approval from a regulator," Jones said before the election.