CA health insurance rates to get closer scrutiny

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April 2, 2012

Consumers Union Launches Effort to Scrutinize Health Insurance Hikes in California

Contract Award From California DMHC to Consumers Union Aims to Educate
Public And Slow Rapid Rise of Health Insurance Premiums
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SAN FRANCISCO, CA — Consumers Union, the policy and advocacy arm of Consumer Reports, announced today that it has received a contract award from the California Department of Managed Health Care (DMHC) to evaluate proposed health insurance premium increases and give consumers a greater voice in rating procedures. Consumers Union will review selected health insurance rate filings for California’s managed health care plans; DMHC-licensed plans cover roughly 22 million Californians.

“This contract will enable Consumers Union to step up our work to ensure a fairer marketplace for health insurance consumers.” said Consumers Union Special Projects Director Betsy Imholz. “Our ultimate goal is to slow rapidly rising health insurance premiums for consumers. Holding the insurance industry accountable through increased scrutiny and public education is a critical part of that effort.”

President Obama’s Affordable Care Act (ACA) requires states to establish a health insurance rate review process to protect consumers from rapidly rising premiums. In order to meet the ACA requirement, the California Legislature passed Senate Bill 1163 by Senator Leno (D-San Francisco) in 2010. The legislation requires health plans to submit premium rate information to the DMHC for examination to determine if rate increases are unreasonable.
To strengthen the goal of premium accountability, DMHC received a federal grant under the ACA to engage a private non-profit consumer advocacy organization to enhance the premium review and decision making process. DMHC awarded Consumers Union the contract to provide input and public comments on select premium rate increase filings. As part of that effort, Consumers Union will work with a private actuary to evaluate complex insurance rate filings.
“We are eager to develop a long term strategy for engaging consumers in this process,” said Imholz. “Shining a light on unreasonable rate increases, and educating the public on how their health insurance premiums are set, are crucial first steps in holding the health insurance industry accountable.”

Consumers Union is contracted to work with on this initiative for three years. DMHC may request Consumers Union to review a specific rate filing or the consumer group, at its discretion, can select rate filings it believes may have a great impact on the public. It is important to note that while DMHC can declare premium hikes unreasonable, under current law, regulators do not have the authority to stop premium increases from going into effect.

Contact: Michael McCauley, mmccauley@consumer.org, 415-431-6747, ext 126