Pass AB 2758 to give health care reform a boost in California

Greenlining Institute
By Hector J. Preciado

THE NATIONAL Health Care Reform just signed into law by President Barack Obama will be good for all Californians, particularly low-income Californians and communities of color, who disproportionately lack access to care. But, important as it is, this new federal law doesn’t go far enough.

On the plus side — and it’s a very big plus — the new law will help millions of uninsured Californians obtain health coverage. But it doesn’t do everything we need to fix our state’s broken health care system. In particular, it does far too little to protect against skyrocketing insurance rates.

California Sen. Dianne Feinstein worked with Obama to try to insert rate regulation into the health care bill, but procedural rules in Congress prevented this from happening.

Instead of strict rate regulation, the law signed by the president simply requires that 85 percent of premiums paid by policyholders go to health and medical expenses, with no more than 15 percent going to administrative expenses, overhead and profits.

That is a good start, but it’s not clear that this provision will do enough to control rate increases. And you can bet that even as you read this, insurance company accountants are working up creative ways to define health and medical expenses that will allow them to pad their profits and expenses.

That’s where a bill in the California Assembly known as AB 2758 comes in. Based on legislation that passed the state Assembly in 2007, but failed by one vote in the Senate, the bill has gained new life since the passage of national health care reform, passing the Assembly Health Committee by an 11-3 vote.

AB 2758, authored by Assemblyman Dave Jones, D-Sacramento, would put California health insurance rates under the same sort of strict regulation that California has now for auto insurance.

Insurance companies or HMOs seeking rate increases of more than 7 percent per year would have to submit them for review and approval by the Department of Insurance or the Department of Managed Care.

Momentum for the bill has been boosted by frightening rate increases by insurance companies such as Anthem Blue Cross, which recently jacked up rates as much as 39 percent. It is supported by consumer groups, AARP, labor unions and many others.

Not surprisingly, the insurance industry is strongly opposed, and you can count on insurers to fight as hard as they can to stop this sensible piece of consumer legislation.

It is critical that legislators hear from their constituents as to how urgent it is for them to pass this legislation.

Lack of access to health care is a problem throughout California and a true emergency in many communities. Latinos, for example, have the highest uninsured rate of any racial or ethnic group, African-Americans are more than half again as likely to be uninsured as whites, and Asian and Pacific Islanders are more likely to forego routine and preventive care due to costs.

The new federal law will make health coverage more available, but availability doesn’t help much if costs soar beyond what most people or businesses can afford. Californians urgently need the added protection that AB 2578 will give.

In California, we have a proven, effective system that’s been working to control car insurance rates for two decades. Surely our health insurance is just as important.