Rate regulation can be a BIG business venture for consumer groups. In California carriers need to file their rate changes with regulators, but as long as the rate increases are actuarially sound they move forward. The commissioner Dave Jones, would like to change that (actually he’d like to put the health insurance companies out of business by using a single payer system, but that’s another matter). What people are suggesting is that the state needs to be able to “have the authority to minimize families loss of health insurance coverage as a result of steeply rising premiums costs”. The Assembly bill 52 is the bill that is being put up for change from the department of managed care.
What is one of the ways a Carrier rates?
Rating Bands: This type of rate is for the small group market. Like I said before many states have implemented rating bands that limit the premiums that are seen in their health status. Rating bands are either expressed as a ratio of the highest rating to the lowest (1.5 to 1) or as an index rate ( +/- 30%). Rating bands may also be composite rating bands that place limits on combined characteristics (a composite rating band that allows 4:1 may be based upon health status, age, gender, industry, and group size altogether).
Not only does this assembly bill give carriers a free pass, it might even be likely that it could hurt the consumer groups that support it. AB52 requires insurance companies to pay for costs incurred by groups representing consumers at rate healing. This could add up to some large amounts in legal fees. Although consumer groups benefit from rate regulation, what about the other issues we brought up? This is mainly for small group medical insurance, but it could relate to you later on if you decide to join a small group.