Consumer group calls for state ballot initiatives to rein in premium hikes

California-based Consumer Watchdog wrote to President Obama on Tuesday urging him to use the powers of his office to get tough on healthcare plans.

The group suggested that Obama "use the full power of your office" to advocate for tough "prior approval" insurance regulations in Congress. If that fails, the White House should "take your case to the states" and try to get prior-approval premium regulations through the state ballot measure process in the 24 states — and the District of Columbia — where that's an option.

Consumer Watchdog added that California's property and casualty insurance regulation, known as Proposition 103, could be "the model for a state-by-state campaign to enact prior approval regulation of health insurance rates." Proposition 103 was authored by Consumer Watchdog founder Harvey Rosenfield and requires that auto insurance rates be approved by the elected insurance commissioner; it also gives consumers the right to object to "unreasonable increases" and demand hearings on those objections. The law was approved by voters and enacted in 1988.

The group also requests that the administration make the federal regulations granted by the new healthcare law as tough as possible. The law grants the Department of Health and Human Services the ability to review "unreasonable" premium increases and requires insurance companies to publicly justify such increases.

Consumer Watchdog suggests that: 

• HHS regulations must define 'unreasonable' in a way that allows for the broadest possible review of rates, and ensure full public disclosure of the justifications insurers file for unreasonable increases;

• Insurer disclosures must include robust data for rate reviews to shine new light on questionable rate hikes; otherwise the industry will just gain another way to obscure data and mislead the public;

• HHS should address the need for strengthening state regulation in the second round of rate review grants. Additional funds should be limited to states that demonstrate concrete movement toward prior approval premium regulation, where regulators must approve rate increases before they take effect; and 

• A state’s promise of increased “review” and transparency is not enough if the insurance commissioner does not have authority to reject excessive, even unjustified, rates.