Consumer advocates, unions back health care ballot measures

02/26/2012 12:00 AM

02/24/2012 7:14 PM

Consumer advocates and labor unions are looking to tap into Californians' anxiety over health care costs with ballot measures targeting insurance companies and hospitals.

Signature gatherers are out now trying to qualify three initiatives for the November ballot. Two of them are being pushed by a union that represents health care workers. But the third, which would move last year's legislative battle over regulating health insurance rates onto the ballot, figures to generate the most interest. It would give the state insurance commissioner the power to block health insurance rate increases it deems excessive.

"Voters are both anxious and angry, not only about the costs of both insurance and care, but because they don't understand why costs are so high," said Jamie Court, president of Los Angeles-based Consumer Watchdog, the initiative's prime backer.

The so-called Insurance Rate Public Justification and Accountability Act also would require insurers to publicly justify proposed rate increases and get permission from the state before putting them into effect.

If the rate regulation measure passes, California will join Colorado, Maine, New York and Oregon as states with the authority to approve health insurance rates.

To qualify for the November ballot, an initiative needs just over 500,000 valid signatures from California voters.

Consumer Watchdog pursued the ballot measure after similar legislation, AB 52, stalled in the state Senate last year amid opposition from business groups, the insurance industry and local governments.

Despite deep-pocketed foes, backers of the proposed measure are counting on growing consumer angst over the price of health care to ensure victory at the polls.

They note that an increasing number of Californians are shouldering medical debt. A recent UCLA study showed that about 2.6 million adults 64 years old or younger carry some medical debt – 400,000 more than in 2007. More people in a state with an already high level of medical indebtedness are living on a "thin margin," the report concluded.

"Transparency is a very important issue," said Dylan Roby, a health policy expert at the UCLA Center for Health Policy Research, which conducted the study. Insurers are "making a decent amount of money in the market" and passing on costs to consumers, he said. "That will resonate with people."

Already, pressure from angry ratepayers, consumer advocates and state Insurance Commissioner Dave Jones has caused big insurers to blink.

Blue Shield of California last spring backed away from a rate hike it had proposed and in June pledged to cap profit at 2 percent of revenue. Blue Shield ultimately gave back more than $460 million last year in the form of consumer credits, funding to care providers and grants toward care for low-income Californians.

But even as the initiative efforts begin, Blue Shield is implementing a new rate hike. And another of the state's largest health insurers, Anthem Blue Cross, has rate increase proposals under review.

Blue Shield's increase – averaging 7.9 percent, with a maximum of 14.9 percent – goes into effect March 1 for about 320,000 individual policyholders. Anthem's proposed increases for two groups of policyholders average 9.6 percent and 10.8 percent and would affect about 700,000 individual policyholders.

"It's a lot to ask, but this is the reality," said Blue Shield's Steve Shivinsky. "We're seeing the annual cost of care increasing."

Insurers say they share consumers' concerns about rising health care costs. But they object to being painted as a culprit in need of more regulation.

The California Association of Health Plans, a health insurers trade organization, pegs health care costs in California at $280 billion and says the number could soar to $552 billion by 2020.

The group said numerous factors contribute to the rising premiums, including underpayments to caregivers by Medicare and Medi-Cal, high levels of obesity, managing chronic illnesses, rising prescription costs, hospital staffing costs and seismic retrofitting requirements.

"Patients' expectations are at a high level," said Dennis Tootelian, a professor at California State University, Sacramento, who does consulting work for health networks.

Hospital officials list many of the same factors as the insurers when citing rising costs. Their concern about rising salaries for health care workers, particularly registered nurses, has led to contentious labor negotiations.

"There's not bars of gold sitting under these hospitals," Tootelian said. "There's the costs of nurses and upgrades and requirements. There's the push up from regulations, a push down from other regulations that lower reimbursements."

The health care industry may receive little sympathy from recession-weary Californians, however.

Though the federal Affordable Care Act and state health benefit exchanges aim to make health care more accessible to consumers, "a lot won't go into effect until 2014," UCLA's Roby said, "and they're worried about it now."

And much attention has been paid to insurers' and health networks' robust profits and the lofty pay drawn by top executives.

Blue Shield's chief executive officer, for instance, earned $4.6 million in 2010, according to the insurer's salary information. Kaiser Permanente's CEO made about $7.7 million in compensation and benefits, according to tax filings, while the CEO of Sacramento-based Sutter Health made about $4.8 million.

"People have a lot of anxiety about the costs of health care, but they can't do much about it," said Elizabeth Brennan, a spokeswoman for Service Employees International Union-United Healthcare Workers. The union is backing two health care cost initiatives.

One, the Fair Healthcare Pricing Act of 2012, would bar hospitals from charging more than 25 percent above the cost of providing patient care. The other, the Charity Care Act of 2012, would require nonprofit hospitals to spend at least 5 percent of patient revenue on care for the needy in exchange for maintaining their nonprofit status.

As with the advocates for health insurance rate regulation, the SEIU hopes to channel health consumers' dismay over rising health costs.

"(Hospitals are) separating the quality of care from the cost of care, but we're not clear on the rationale for the costs and that leads to the anxiety," Brennan said. "As a consumer, you don't have a choice, but you want to know they're not gouging you."

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