A leading consumer group has launched an initiative drive to give state regulators the power to reject health insurance rate increases.
Consumer Watchdog has asked the state attorney general to prepare a title and summary for a proposed initiative for the November 2012 ballot to require that proposed rate changes are submitted to the state insurance commissioner for approval before taking effect.
The group had announced plans to go to the ballot earlier this year, after rate-regulation legislation stalled in the state Legislature.
"The Legislature didn't do this so the public's going to have to do it," said Consumer Watchdog President Jamie Court.
Court said the group's polling has shown widespread public support for what he called a "common sense proposal" to expand provisions of the voter-approved Proposition 103, which regulates auto and home insurance rates, to health insurance.
The proposed initiative would also prohibit insurers from considering a lapse in coverage when determining rates or premiums for auto, health or homeowners' policies. That provision is intended to counteract one possible effect of another proposed ballot measure backed by the insurance industry.
Supporters of the proposed auto rate initiative, which is similar to failed 2010 measure Proposition 17, have argued that allowing insurers to consider a motorist's coverage history would allow companies to extend some discounts to new customers who want to switch providers. Court said the language in his proposed initiative is intended to ensure that the change, if approved by voters, could not be used to raise rates on customers who went through a period of no coverage, making the industry backed measure a "discount-only initiative if ours passed."
Rachel Hooper, a spokeswoman for the auto insurance initiative, disputed Court's portrayal of their measure, saying it simply "makes it easier for more people to get insurance at a better price." She dismissed the Consumer Watchdog proposal as a "bad initiative written more to feather the nests of corporate lawyers posing as consumer advocates than to benefit those seeking insurance in California."
Once approved for circulation, Court and supporters will have 150 days to collect the more than 500,000 valid voter signatures needed to secure a spot on the ballot.
Court said while the group has "substantial" financial commitments to help fund its qualification drive, it will likely seek to emulate the mostly volunteer and direct mail effort it used to qualify Proposition 103 for the 1988 ballot.
"Do we have all the money to pay $3 a signature? No. But we do have the money to do what was done with Prop. 103 which is tap into direct mail and fill in where we need (with paid signature gatherers)," he said.
Charles Bacchi, executive vice president of the California Association of Health Plans, dismissed Consumer Watchdog's initiative "another deeply flawed policy proposal that is ultimately designed to line their pockets with cash from expensive lawsuits."
"If this proposal even makes the ballot, it will be defeated. Broad-based opposition by employers, doctors, hospitals, and medical groups to similar legislation demonstrates that giving a politician the power to set prices does not address the real reason health care costs are increasing and could threaten patients' access to medical care," he said in the statement. "California patients and voters are savvy enough to see through this gimmick and will believe that those providing medical care hold the key to improving our health care system, not trial attorneys and their flurry of lawsuits."
Editor's note: This post was updated at 4:10 p.m. with a response from the California Association of Health Plans. It was updated at 5:25 p.m. Thursday with a statement from Pitts.