Tolstoy's line about all unhappy families being unhappy in their own way hardly needs validation from us in the 21st century. But still it would be interesting to see what he'd make of the increasingly bitter division between two state agencies that should be working hand in hand to improve health insurance coverage for Californians: the state's individual health insurance exchange, Covered California; and the Department of Insurance.
They've been at odds for months over various aspects of the
Proposition 45 is strongly supported by Insurance Commissioner Dave Jones, who has been trying to enact health insurance rate oversight for seven years, dating back to his time as an assemblyman from Sacramento. But it's strongly opposed by members of the Covered California board, including Susan Kennedy, a business consultant who served as a high-ranking aide to Govs. Gray Davis and
Here's how Kennedy described the effects of Proposition 45 during a Covered California board meeting on Aug. 21: "It's going to end up hurting Californians, hurting consumers, increasing costs, and it will damage healthcare reform, perhaps permanently, perhaps fatally, in California and I think perhaps nationally."
Whew. Just by giving the insurance commissioner advance approval authority over health insurance rates? The way Kennedy talked, you wouldn't know that 35 states and the District of Columbia already have some form of prior regulatory approval over health insurance rates. We offered Kennedy the opportunity to expand on her concerns, but she didn't respond.
There must be something else going on here than merely an internecine dispute about how to regulate insurance premiums.
Proposition 45 would give the insurance commissioner the same approval authority over health insurance that he got over property and casualty lines, such as auto and home insurance, from Proposition 103 in 1988. Both measures are largely the brainchild of Consumer Watchdog, a Santa Monica-based consumer advocacy group.
Proposition 45 fills an important gap in the Affordable Care Act, which left rate regulation up to the states. States lacking prior-approval laws, like California, thus were left without a key tool for holding down insurance costs; state regulators could "review" rates posted by insurers, but couldn't stop them from implementing rate increases they deemed "excessive."
One would think that Covered California would welcome an ally with power to reject excessive premiums. Instead, Kennedy and other board members are agitating for the exchange to take a formal position against Proposition 45. But the exchange's executive director, Peter Lee, warned that "we are better served by not becoming by our own actions a focus of the politics."
Covered California would risk getting tarred with the goo of bogus claims and rank misinformation of the opposition, which is organized as Californians Against Higher Health Care Costs. You won't find Kaiser, Anthem Blue Cross, Blue Shield, Health Net, United Health or WellPoint among the coalition members listed on the campaign's website.
To find them, check the campaign's financial records. Those six companies have contributed more than $37 million to the campaign (as of April 30). Only $45,000 more has been collected — and that's from the California Assn. of Health Plans, which is made up of those companies and other insurers. This is what a grass-roots campaign looks like when it's manufactured from gold-plated AstroTurf.
So why is the exchange so nervous about Proposition 45? Covered California functions almost as a public insurance company itself. It works with insurance companies not merely to set rates but to structure their benefits and their physician and hospital networks.
Indeed, at the Aug. 21 meeting, some members of the board sounded almost like executives of a private insurance firm. They groused about the prospect of dealing with another level of government regulators. They paid lip service to the concept of prior approval, but insisted "now is not the time." (Kennedy again.)
That's not to say that some of Covered California's concerns aren't legitimate. "The biggest thing that's certain [about Proposition 45] is the uncertainty of how it would be implemented," says Lee. Many of its provisions would be left up to the insurance commissioner, and possibly the courts, to nail down. Commissioner Jones is known as a consumer advocate, but a future commissioner might not be as steadfast — and would have a lot of power.
Covered California is especially worried that an insurance commissioner might want authority over benefit structures and provider networks, which Covered California wants to keep for itself.
"My department has answered in writing every question posed by Covered California and its staff," Jones says. He has tried to assure the exchange that the approval timelines in Proposition 45 won't interfere with the ACA annual calendar, and that he has no intention of stepping over the line into benefit and network design. He's mystified by their continued complaining: "I'm forced to conclude that they have board members who are ideologically opposed to rate regulation."
As a last piece of the puzzle, consider that this isn't the first conflict between the insurance commissioner and the exchange. Last November, Jones lashed out at the exchange for not allowing "grandfathered" health plans to remain in effect past Dec. 31, despite a federal policy aimed at easing the transition to ACA-compliant insurance and assuaging customers whose old plans had been canceled. Before that, there was a fight over how the exchange proposed to sell dental plans for children. And most recently, they tangled in July over figures released by Jones showing that premiums had soared in 2014, and his argument that rates for 2015 have been held down by insurers' fears over Proposition 45. Lee called Jones' figures "misleading and distracting."
That noise you hear may be the sound of a battle for regulatory supremacy over health insurance in California. Lee says the exchange will find a way to deal with Proposition 45 if it passes. But since it may be impossible to obtain rate regulation from a Legislature in the insurance industry's pocket, it would be even better if the exchange and the commissioner could come out jointly in support of the ballot measure, along with a pledge to fix whatever flaws emerge.
"If everyone's together, it can work," says Anthony Wright, executive director of Health Access, a leading healthcare consumer group that supports Proposition 45. "That's our hope."