California's health insurance companies continue to squawk about a bill that would require them to justify rate increases – and give state officials authority to deny unreasonable increases.

Assembly Bill 52, by Assemblymen Mike Feuer, D-Los Angeles, and Jared Huffman, D-San Rafael, comes up for a key vote at Wednesday's Senate Health Committee meeting.

It's time for California's state senators to stand up for the same kind of reasonable rate review and approval process that other states have.

It is worth asking just why insurance companies don't want to have to justify their rate increases before they are implemented – or to go back to the drawing table if their proposed rates are found to be "excessive, inadequate or unfairly discriminatory."

Opponents have falsely characterized the bill as state regulators "setting rates" or as "setting arbitrary limits on private insurance." The bill does neither.

All it does is require health insurers to submit evidence and a rational reason for the rates they have chosen. If the insurer can show that the new rate is reasonable in relation to the benefits provided, it gets approved.

If the insurer can't do that, the bill simply gives state officials the authority to reject the rate proposal.

The health insurer can re-submit a request for a rate increase with additional supporting evidence – or revise the request. Alternatively, the insurer can request an arbitration hearing held by an administrative law judge to settle the matter.

And insurers have doctors all in a tizzy, too. Even the doctors are falsely calling the bill "rate setting."They fear that state officials will "set" insurance premiums below cost, causing health insurers to target them for cost-cutting efforts.

But doctors and hospitals have protections under existing California law that require insurers to pay the "reasonable and customary" value of services. Insurance premiums will be approved or blocked based on the information that insurers provide.

The debate over AB 52 occurs as health insurance companies continue to hit consumers with astronomical increases in premiums.

A Friday headline in The Bee read, "1.5 million Californians face health insurance rate hikes today." On July 1, many who get insurance through small-business employers got slapped with double-digit rate increases, when the national average increase is 3.4 percent. Some of Aetna's small-group customers will see rates increasing 92.5 percent, according to California Department of Insurance data.

The debate also comes at a time of record profits for health insurance companies.

Insurers decrying "arbitrary rate setting" would do better to look at their own practices. They might have more credibility if they supported rate review with state authority to block unreasonable increases. They also might have a little faith in their own abilities to justify the rates they charge.

It likely will be a close vote, but the Senate Health Committee should approve AB 52.

The Bee's past stands

"The health insurance market is heavily concentrated and consumers have few alternatives. … That's why rate regulation is needed."

– April 10, 2011

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