California health insurers are ordered to spend at least 80% of revenue on medical claims

California’s new insurance commissioner sought Monday to force health insurers to spend more of their revenue on medical care.

In his first official act, Insurance Commissioner Dave Jones ordered emergency regulations requiring insurance companies to devote at least 80% of their income to policyholders’ claims in the state’s individual insurance market.

Jones’ plan matches provisions in the new national healthcare law. Jones said the emergency regulations would enable him to enforce the 80% spending requirement in the federal law at a time when congressional Republicans are trying to kill funding for the measure.

California now requires insurers to spend at least 70% of revenue on policyholders’ medical bills.


A Democrat who served three terms in the state Assembly, Jones said the emergency regulations were “part of a larger effort to implement national healthcare reform.”

The regulations must still be approved by California’s Office of Administrative Law. If permitted, they would take effect this month and be in place for six months while the Insurance Department writes permanent rules.

Jones also announced other plans to press his healthcare agenda, including the creation of a new post in the Insurance Department to oversee healthcare policy. He also said he would work with the Legislature on a bill to give him direct authority over health insurance rates in the same way that he oversees auto insurance rates.