Managers of California's state-based public health insurance exchange say a proposed rate control measure could backfire, by hurting their ability to bargain with health insurers.
Peter Lee, the executive director of Covered California, included an analysis of Proposition 45 in today's exchange board meeting packet. If approved and implemented as written, the ballot measure would give the state insurance commissioner the authority to reject proposed health insurance rate increases, and to conduct backward-looking reviews of rates approved for 2012 through 2015.
California Insurance Commissioner Dave Jones has noted that he already has the authority to change property-casualty rate increase requests. He says Proposition 45 would help him prevent excessive rates from taking effect in the individual and small-group markets.
In some states, a public exchange offers any qualified health plans (QHPs) available from any insurers willing to meet exchange listing criteria. Covered California is an "active purchase," and it tries to bargain with QHP issuers to get them to offer better benefits and lower rates.
Charles Bacchi, executive vice president of the California Association of Health Plans (CAHP), wrote to Covered California to say that health insurers in the state already face tough state and federal regulations, and tough negotiations with Covered California.
"Why would QHPs negotiate rates with Covered California when they know they will be challenged?" Bacchi asks. "Why would QHPs agree to charge a rate for a product when the design of that product can be changed later?"
Exchange officials echoed CAHP's arguments in its own analysis of the proposition.
"Covered California's role as an active purchaser could be significantly undermined, if health plans are reluctant to consider or negotiate on factors other than price because of uncertainty about the subsequent price that will be approved (or ordered)" by the California Department of Insurance, according to the analysis.
In other California exchange board meeting news, officials reported that:
- 8 percent of the consumers who got QHP coverage through Covered California said they got help from a health insurance agent or broker. Twenty-six percent said they got help from a Covered California representative, and 2 percent said they got help from a community or county health worker. Another 39 percent said they got individual QHP coverage on their own.
- The budget allocation for Covered California agent support could hold steady at $9.9 million in 2015.
- Exchange certified insurance agents are much less likely than certified enrollment counselors to know Spanish but much more likely to know Korean. Only 15 percent of the agents know Spanish, compared with 58 percent of the enrollment counselors, but 5 percent know Korean, compared with just 1 percent of the enrollment counselors.