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Prop 45 and Health Insurance Rates

Uploaded: Oct 9, 2014
It's ? E-lection time again ? you will deceive me,
I can hear those nasty code words in your ads.
I can tell by the 'on' you 'shine' me, darlin',
That we vote real soon, and so it's lyin' time.


If you don't like pesky truth-in-advertising laws, this is your month. As much as I'm armed with my DVR and fast-forward remote controller, Prop 45 TV ads have overwhelmed my defenses. Truth and I are both taking a beating.

Proposition and candidate ads are in a different class from normal sales pitches. They are 'political speech.' As such, they are nearly immune from any attempts by government to regulate their content. We call that kind of interference 'censorship,' and there are excellent reasons that state must strictly leave hands-off. Ads that try to sell you some bauble, by contrast, are seen in the law as 'commercial speech' and much less central to the interests of the society. Thus, the First Amendment allows some government role in ensuring a level of truthiness in the impressions they generate.

Let's look at what Prop 45 actually says -- from the non-partisan legislative analyst, in the Official Voter Information Guide, and then examine the Pros, Cons and Ho-hos of it.

"Summary

Requires Insurance Commissioner's approval before health insurer can change its rates or anything else affecting the charges associated with health insurance. Provides for public notice, disclosure, and hearing, and subsequent judicial review. Exempts employer large group health plans. Fiscal Impact: Increased state administrative costs to regulate health insurance, likely not exceeding the low millions of dollars annually in most years, funded from fees paid by health insurance companies."

The Guide further indicates that the content of most health insurance plans currently must meet state requirements set by either the Department of Managed Health Care or the California Department of Insurance (CDI). The rates charged by those insurers, however, are not regulated. Rather, the regulators can only 'review' coverage, co-payments and deductibles, and administrative costs -- but then they are limited to suggesting whether they consider those rates to be 'reasonable' or not.

By contrast, rates for auto and homeowner's insurance Are now regulated by the CDI. Per 1988 Prop 103, those rates must not be 'excessive, inadequate or unfairly discriminatory.' Prop 45 extends that final authority over proposed rates to some health insurance policies, subject to judicial appeal from the Insurance Commissioner's decision. CDI rate review costs ("likely not exceeding the low millions annually?") are recovered from fees charged to the insurance companies, and may end up being passed along to policy holders.

It is important to understand that this Proposition applies only to Individual and small-group rates, which together comprise only 16% of the market (about 6 million souls). 37% of Californians are beneficiaries of government plans (Medicare, Medicaid), and 40% of us are covered by large group employer plans (7% remain uncovered, at all). Large plans are exempted, presumably because those folks can fend for themselves$.

Here are the arguments, pro and con, also included in the Guide, but sourced from advocates.

PRO:

o Health rates in CA up 185% since 2002, 5x the general inflation rate, and including $250M the CDI viewed as 'unreasonable.'

o Since Prop 103 in 1988, CA is only state where auto insurance rates have actually gone down, saving Californians an aggregate $102B.

o Federal mandate that all people get health insurance makes it imperative that small consumers be protected against price gouging.

o 36 of the 50 states already regulate these health rates (per the SJ Mercury News).

CONS:

o There's a new independent commission working on this very thing.

o Prop 45 is a special interests power grab that puts too much power in the hands of one politician

o $10s of millions in new, duplicative bureaucratic costs, every year

o costly new frivolous lawsuits hidden in fine print

o exempts big corporations, as it burdens small business with costly costs.

SPENDING by Top 10 Contributors :

Pro-45: $3,183,650 ('Consumer Watchdog Campaign,' CA Nurses Ass'n., a VC, a few prominent law firms

Opp-45: $37,929,670 (all but $10,000 from health insurance companies)

ANALYSIS:

I have to go with the Pro-45s on the arguments, above. I do not see why health insurance should be treated differently from other forms of insurance, especially given its much larger bite of everybody's monthly fisc. The fact that most other states do it this way suggests that there's some logic behind the approach.

Of course, regulation does cost money, but low millions is not much in the context of a $100 Billion state budget, and the new review process is added into familiar, existing agency business. Some part of those costs will be passed through to rate payers, but that kind of begs a related question: how much of my health care premium went into that $38 million the insurers have invested in defeating this thing?

Moreover, $38 million? More than 10x what the opposition is spending? What's that smell?

THE HOHO TEST:

This test measures the portion of the arguments that you'd avoid if you saw it on the sidewalk. The Pro-45s at least lead with specifics that can be audited, and even if we halve them for partisan bloat they are still significant.

By contrast, the CONs do not dispute those specifics, their "one politician" is the Insurance Commissioner whose job, after all, is to regulate insurance. They also fail to identify this shiny "new independent health-care commission" in any way that would allow readers to look it up.

They toss-out vague-but-loaded terms like "sweeping control," "costly duplicative bureaucracy," "frivolous lawsuits" and "exempts big corporations." And they begin their argument with the disingenuous phrase: "We all want to improve our health-care system, but ?" Really? Who's this 'we,' kimo sabe? And what other improvements, pray tell, are you spending $38 million to effect? That feeling of manipulation you might have felt viewing their commercials is just you ? resisting manipulation.

Sometimes political speech takes its license too far, and is just too transparently deceptive to work its magic. I'd advise a 'yes' vote on Prop 45.

Comments

 +  Like this comment
Posted by San Ramon Observer, a resident of San Ramon,
on Oct 10, 2014 at 12:29 pm

San Ramon Observer is a registered user.

I have not visited the "No on 45" website to get "the (their) facts." I figure any facts on the "No on 45" website are there to get us to vote NO. I'm voting YES on 45 and 46, but the pile of poo poo against 45 will probably drown it.

Roz


 +  Like this comment
Posted by Jeremy Engdahl-Johnson, a resident of Downtown,
on Oct 12, 2014 at 9:20 am

Our updated ACA premium rate reading list provides new perspective on factors affecting 2015 health exchange rates. More at: Web Link


 +  Like this comment
Posted by Formerly Dan from BC, a resident of Bridle Creek,
on Oct 13, 2014 at 4:37 pm

Formerly Dan from BC is a registered user.

I, for one, would be interested in any metrics for ACA.

So, why won't the fed tell us how ACA is doing?

Tom? Beuller? Dogfath...?


 +  Like this comment
Posted by Tom Cushing, a resident of Alamo,
on Oct 13, 2014 at 10:01 pm

Google is your friend, Skeets. "ACA" and "Krugman" will give you a pretty good start.

(The reason you haven't heard about it is that it is doing well, and health care costs are rising at the slowest rate in many years. Nothing to see there.)

However, with that said, I do not intend for this thread to devolve into a series of rants and counter-rants about the ACA. If you want to do that, I'd suggest the Town Square. Happy to entertain commentary about Prop 45, to your buggly heart's content.


 +  Like this comment
Posted by JimF, a resident of Danville,
on Oct 14, 2014 at 9:18 am

I appreciate your commentary on Prop 45 and I hope you do one for Prop 46. Initially I was going to vote NO on Prop 45, but your analysis convinced me to vote YES.


 +  Like this comment
Posted by Tom Cushing, a resident of Alamo,
on Oct 14, 2014 at 9:32 am

Will do, JimF. Thanks for the word.


 +  Like this comment
Posted by Formerly Dan from BC, a resident of Bridle Creek,
on Oct 14, 2014 at 10:00 am

Formerly Dan from BC is a registered user.

{Deleted. Some folks just don't listen.}


 +  Like this comment
Posted by Formerly Dan from BC, a resident of Bridle Creek,
on Oct 14, 2014 at 10:12 am

Formerly Dan from BC is a registered user.

{Deleted. Some folks Really just don't listen.}


 +  Like this comment
Posted by Derek, a resident of Danville,
on Oct 16, 2014 at 11:14 am

Wifey and I will both be voting yes on 45, even as flawed as it is.
I am really tired of good ol' "non-profit" Kaiser and their constant whining. They claim it will raise our insurance costs? Note to Kaiser's directors: You already have been raising them every single year, and our rates are going up again in 2015. You want to save us money? Stop spending umpteen billions on tv and radio advertising.


 +  Like this comment
Posted by Herman Glates, a resident of Danville,
on Oct 23, 2014 at 3:25 pm

My wife?s a Democrat. So the liberals send her political ads in the mail. I usually throw them in the trash before my wife can see them. Just trying to help.

Yesterday, she got one in the mail that urged her to vote No on Prop. 45. It said, ?Vote No on Prop. 45. Don?t let the right-wing conservatives destroy the Affordable Healthcare Act, Obama?s crowning achievement!?

I started laughing. Didn?t Cushing say Vote yes on Prop. 45??? Are you against Obama crowning achievement?? How dare you!

Liberals didn?t have to convince me. I always vote no on every ballot measure.


 +  Like this comment
Posted by Tom Cushing, a resident of Alamo,
on Oct 23, 2014 at 4:35 pm

I fear you've been duped, Glatesy. Not all liberals think alike, of course -- although 'think' and 'not alike' may each be foreign concepts on your side of the chasm. So you may just have to trust me on that.

Here's what I think has happened -- the Biggbux insurers have already saturated their natural constituencies with propaganda -- and yet, there's plenty of filthy lucre left in their campaign coffers. How better to 'invest' it than by sowing confusion among the Prop 45 Yes-sers? Maybe some of them will be fooled into going with the naysayers.

Probably won't work though. Your wife sounds like a very smart woman. Indeed, we have evidence of only one serious blunder in her entire adult life!



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