Healthcare Business News

Insurers pour money into fight against Calif. ballot initiative

By Paul Demko
Posted: April 16, 2014 - 4:30 pm ET

A political battle looms over whether regulators in the nation's most populous state will have the authority to reject proposed health insurance rate hikes, a power that could make a big difference in the fate of the Obamacare insurance exchanges.

Supporters of the referendum argue that it's a long overdue mechanism to rein in unreasonable rate hikes and supplement changes that were part of the Patient Protection and Affordable Care Act. The measure, which received enough signatures in 2012 to qualify for this November's ballot, would require a sworn statement by health insurers as to accuracy of information submitted to the state insurance commissioner to justify rate changes. It provides for public notice, disclosure and hearing on health insurance rate changes, and subsequent judicial review. It exempts employers' large group plans, unless the rate increase exceeds 10%.

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It's going to be a multimillion-dollar battle. The insurance industry, which has the support of the California Medical Association and the California Hospital Association on this issue, is pouring resources into a vigorous campaign to defeat the ballot initiative. They argue that it will add unnecessary time and cost to a process that's already regulated by two state agencies. In addition, they note that the state's insurance exchange, Covered California, already has the authority to determine which insurance products are sold through the online marketplace.

“In California, we've been inflicted with double-digit rate increases each and every year over the last 10 years,” said Dave Jones, California's insurance commissioner and a backer of the ballot measure. “Rates have gone up despite the implementation of the Affordable Care Act and will continue to go up in California unless this reform is enacted.”

The main group opposing the ballot initiative, Californians Against Higher Healthcare Costs, has raised $13.4 million, according to the California Secretary of State's Office. The bulk of that money—$12.7 million—has come from insurer WellPoint and its affiliate, Anthem Blue Cross.

“We all agree that controlling healthcare costs is important, but we can't make irresponsible changes to a complex system without thinking through the repercussions,” said Robin Swanson, a spokeswoman for Californians Against Higher Health Care Costs, to whom WellPoint and other insurers referred questions.

Supporters of the measure have raised only about $425,000 as of April 8, according to Maplight, a nonpartisan research organization. “We expect the health insurers and HMOs to spend obscene amounts of money to mislead voters about the ballot measure,” Jones said.

Money will be important but not necessarily decisive. Dylan Roby, a professor at UCLA's Center for Health Policy Research, said backers of the initiative have a simple populist message, particularly in a state where consumers have seen sharp increases in premiums in recent years. Indeed, it was Anthem Blue Cross' huge proposed 2010 rate increases in California that were credited with giving the Affordable Care Act a strong political boost in Congress.

“People have been seeing those rate hikes,” Roby said. “It's a consumer-friendly (proposal) and fairly easy to understand.”

The insurance initiative is just one of several high-profile initiatives that will appear on the ballot in California in November. Voters also are likely to vote on measures to limit pay for executives at not-for-profit hospitals, loosen caps on awards for pain and suffering in medical malpractice lawsuits, require hospitals to test physicians for drug use and tighten constraints on how hospitals spend money.

Those initiatives still will need to be approved by the California secretary of state's office before they can appear on the ballot. It's expected that the medical malpractice initiative—pitting plaintiff lawyers against doctors, hospitals and insurers—will be the most expensive political contest in the country in 2014.

Follow Paul Demko on Twitter: @MHpdemko

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