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August 26, 2013
California Senate bill would make reason for health care rate increases transparent

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(Aug. 26 - By James Araby and Anthony Wright, Special to the Bee)

A majority of Americans get on-the-job health benefits from their employer or that of a family member. Yet over the last several decades, the costs of these benefits have been shifted onto the individual as more employers scale back or drop coverage - many of them at least partially motivated by the cost of health care.

In California, from 2002 to 2012, health insurance premiums for family coverage climbed by 169.7 percent, more than five times the 31.5 percent increase in inflation. Coverage for an individual cost $545 a month in 2012, but only $196 in 2002. As recently as 2008, health insurance in California was 5 percent or more below the national average - it is now 5 percent above the national average for individual coverage and 16 percent for family coverage.

Skyrocketing health care costs are front-page news because consumers, workers and employers are paying unsustainably higher and higher costs for coverage. No one is immune - not individuals, small employers or large purchasers of health care, from employers to public employee retirement funds or unions, which were thought to have more negotiating power with the insurance industry.

In 2010, more than 7,500 Raley's and Nob Hill grocery workers from the United Food and Commercial Workers union endured a contentious 10-day strike in Northern California. Workers stood on picket lines outside their places of employment holding picket signs and chanting slogans before finally coming to a new contract agreement with management, which meanwhile had hired 500 replacement workers to stand in for the striking workers. The primary reason workers were willing to suffer through the acrimony and stress? The threat of losing or ending up with significantly diminished health coverage.

Last year, California UFCW grocery workers faced the threat of yet another strike over health care, and this September, they are primed to begin contract negotiations again. Hotel workers in San Francisco have seen health care costs climb 209 percent over the last decade and face labor dispute after labor dispute over the cost of health benefits. The specter of a loss or reduction of health care benefits for workers looms large over these proceedings, and in other workplaces around the state.

It doesn't have to be this way. The Affordable Care Act, and a follow-up state law by state Sen. Mark Leno in 2010, for the first time required public scrutiny of rates for health insurance sold to individuals and small employers, who generally have no ability to negotiate with health insurers. As a result of forcing such public disclosure and active review by state regulators at the California Department of Insurance and Department of Managed Health Care, Californians have saved more than $300 million in just the past few years. But for larger employers and union trust funds with more than 50 employees, there is no public scrutiny, no public process - nothing but a failed market.

Senate Bill 746, health insurance transparency legislation that is making its way through the Assembly this month, extends this solution. The bill, also authored by Leno, would clarify the process by which health care providers must submit health care rate increases to the Department of Managed Health Care, requiring data on rate increases any time the rate exceeds the Consumer Price Index published by the U.S. Bureau of Labor Statistics. This would give large purchasers of health insurance the information they need to make good choices for working families and retirees.

If we as a society are serious about our investment in employer-provided health care, rate increase transparency is essential. If prices continue to go through the ceiling for large group health plans, those companies that still provide health care to their workers will lose their ability to compete, and employee health benefits will become a relic of the past. The citizens who bear the brunt of paying these ever-rising costs have the right to know how insurers arrive at these rates, and employee unions and retirement funds have the right to review this information in order to bargain more fairly with employers over how the costs of health care will be shared.

The California Legislature now has a chance to level the playing field when it comes to health care rate increases. Free the data. Allow for public scrutiny over large health care plans' rate increases. Support SB 746.

James Araby is executive director of the United Food and Commercial Workers Western States Council. Anthony Wright is executive director of Health Access.

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