Opinion: Poll: Should California regulate the price of health insurance?

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Jon Healey’s blog post on the plan by WellPoint’s Anthem BlueCross to raise health insurance premiums by up to 39% raises an interesting question: Should California regulate such price hikes, just as it does with auto insurance and other types of coverage?

Unlike the 25 states that do regulate premiums, California requires insures only to file and disclose their plans before actually implementing whatever increases they want. The state insurance commissioner can set limits on an insurer’s ‘medical loss ratio,’ or the percentage of premium income that the insurer spends on its customers’ claims. But the point presumably isn’t just to keep premiums from being excessive -- the commissioner also has to protect against insurers going bankrupt and defaulting on customers’ medical bills.

Responding to the Anthem controversy, Sen. Dianne Feinstein (D-Calif.) urged state lawmakers Tuesday to give California the power to limit premium increases. Sacramento previously tried to do this in 2003 with SB 26, which would have required insurers to gain approval from the Department of Insurance or the Department of Managed Health Care before raising premiums. (Click here for an analysis by the RAND Corporation, which warned that tightly regulating health insurance markets would hold down premiums in the short term but would, in the long run, have little impact on premiums and ‘shift the makeup of the insured population towards high-risk consumers.’)

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