Only a politician would promise to protect consumers from a problem he caused.
Take state Sen. Ed Hernandez and his bill SB 908, for example. The bill would require health insurers to notify policyholders if a California regulator determines that a rate hike was unreasonable and unjustified, and give consumers the opportunity to change plans if the insurer implements the excessive hike.
It's the height of irony that Hernandez is trying to shoulder the reformer mantle when he is responsible for allowing unchecked premium hikes in the first place.
Consumers should know when they're facing unjustified rate hikes, and that they might do better by switching plans. Still, the best way to protect consumers from outrageous rate hikes is to prevent them.
Unlike the vast majority of states, neither California's Department of Managed Health Care or Department of Insurance, which oversee health plans and insurers, have the authority to reject excessive rate increases. Because of that, since 2012, health insurance companies have imposed more than $385 million in rate hikes deemed by California regulators to be unjustified. In addition to these actual higher premiums, shrinking physician networks, fewer benefits, increasing out-of-network charges and soaring deductibles have become the hidden premium hike for health insurance that an increasing number of consumers can't afford.
Lawmakers' inaction over the last decade to stem excessive premiums is why Consumer Watchdog went to the ballot in November 2014 with Proposition 45. The ballot measure would have allowed the state’s elected insurance commissioner to make health insurance companies justify their rate and benefit changes under penalty of perjury, and to reject excessive rate increases. Insurance companies spent $56 million to defeat it.
Several earlier attempts at rate regulation in the California Legislature were killed, including one that was thwarted by Senator Hernandez, chair of the powerful Senate Health Committee.
Hernandez has had a lucrative relationship with the health insurance industry. He has received more than $260,000 from the the industry since 2009, through his campaign committees and a ballot committee he controls, according to the state's political money database, Cal-Access. Most controversially, since 2006, he has earned more than $600,000 in rental income from the state’s largest health plan, Kaiser Permanente. The Los Angeles Times reported on this in 2011, and Hernandez has continually rebuffed calls that he recuse himself on votes dealing with Kaiser.
As Hernandez said in a written statement about his current bill, according to California Healthline, "Consumers don’t know what they don't know." Consumers probably didn't know that Hernandez was a major roadblock to rate regulation and stopping outrageous health insurance premium hikes either. Now they do.
