Capitol Alert

California health exchange weighs formal opposition to Proposition 45

Members of the state health insurance exchange on Thursday came out strongly against a fall ballot initiative to give rate-regulation authority to the elected insurance commissioner, with some requesting the board issue formal opposition.

Covered California, the state agency charged with carrying out the federal health care law, issued an analysis stating the measure could have a detrimental impact on the exchange’s operations, including its ability to negotiate with insurance companies. Even under the best-case scenario, Proposition 45 adds delays, confusion, litigation and cost to the process of hashing out benefits, said Susan Kennedy, a Covered California board member.

“Even if you believe that rate regulation is the right thing to do, now is not the right time to make the job we are in the middle of any harder,” Kennedy said. “I think it’s very important that we state clearly that we think that there are problems with enacting an initiative like this at this point in time.”

Kennedy requested that she be allowed to use her board title to campaign against the measure. If the agency staff recommends against board members wading into the debate in their official capacity, Kennedy said she plans to push for a vote of the board.

Board member Kim Belshé said the board “should answer” where it stands on the measure and at a minimum acknowledge the finding of its staff to date including the “very significant, if not grave concerns that Prop. 45 could be detrimental to the operations of Covered California and the consumers we serve.”

The report follows the release of a poll Wednesday that found nearly 70 percent of voters support Proposition 45, which is backed by Insurance Commissioner Dave Jones. He argues rate regulation is the “missing piece” of the health care law because the exchange will never have the clout to negotiate lower rates.

Consumer Watchdog President Jamie Court, the proponent of the measure, said the state health exchange, funded by hundreds of millions of federal dollars, shouldn’t get involved in the campaign.

“Only diehard friends of the insurance companies would dare to put the credibility (of the agency) at risk,” Court said. “And if they do, it would prove exactly why we need independent oversight from an elected insurance commissioner and a transparent and public process.”

Executive Director Peter V. Lee cautioned the board about taking a position. Board Chairwoman Diana Dooley, secretary of the Health and Human Services Agency, broached the subject but said she, too, worries that the intensity of the political campaign could damage the agency’s reputation with the public.

“I guess I am just a little bit troubled that if we take a formal vote on this measure that we then get even more wrapped up in the campaign,” she said.

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