Prop 45 Seeks To Limit Health Insurance Price Hikes

Tamara Kaplan loves to travel.

Her home in University Heights is filled with tokens of her many trips. She brought some distinctive figurines back from one her recent sojourns.

'And I just thought they were just so strange,' Kaplan said. 'And they make me laugh.'

Kaplan is retired, and lives off her investments. She makes too much money to qualify for subsidized health insurance through Covered California. So Kaplan has to buy insurance on the individual market.

Her plan from Anthem Blue Cross costs nearly $1,400 a month.

'Plus another $100 for meds and copays. It's ridiculous,' Kaplan complained.

Kaplan has to shell out about one-third of her income for health insurance. And there's no end in sight.

Last April, Anthem Blue Cross raised her premium 17 percent.

'And I'm totally expecting another rate increase as of April 1st,' she said.

Since 2002, according to the California HealthCare Foundation, health insurance premiums in California have risen by more than 170 percent.

That's the impetus for Prop 45.

Jamie Court is president of the Santa Monica-based nonprofit Consumer Watchdog, the main backer of Prop 45.

'Prop 45 is all about putting the brakes on runaway health insurance rates,' Court explained. 'We are in the minority of states that doesn't allow for the government to say 'no' to an excessive rate hike.'

Court said the measure would give California's insurance commissioner the power to reject unreasonable rate hikes.

Prop 45 would require insurers to publicly disclose and justify any rate increases.

Court said the measure would fill a major loophole in the Affordable Care Act.

'There is no governmental body in California or federally that has the power to tell health insurance companies they're charging too much,' he said. 'And yet, the health insurance companies sell policies, and we all have to buy them. So, the missing link in the Affordable Care Act is having some kind of mechanism to make sure that health insurance rates are affordable.'

Consumer Watchdog was also the driving force behind a landmark measure that gave the state insurance commissioner the authority to regulate the price of homeowners and auto insurance. California voters approved that initiative, Prop 103, in 1988.

According to the Consumer Federation of America, it's helped Californians save billions of dollars on car insurance.

Prop 45 aims to do the same for health insurance.

But a powerful coalition is trying to make sure that doesn't happen.

A group calling itself Californians Against Higher Health Care Costs is leading the charge against Prop 45. The coalition includes health insurance companies, the California Chamber of Commerce, and the California Medical Association.

San Diego pediatrician Sherry Franklin, a member of the CMA board of trustees, said the Affordable Care Act is designed to provide consumers some relief on high health insurance costs.

'And I think we need to let the system play out before we start throwing more pieces into the mix,' Franklin said. 'We've created a system; it's brand new. Let's let it do its job before we assume that it's not going to work for us.'

Under the Affordable Care Act, Covered California is the state's insurance exchange. Dr. Franklin said it has a special commission that reviews rates, and can exclude health plans from the exchange that are too expensive.

'If that doesn't work, then we move forward,' Dr. Franklin said. 'Then we look for another option, or a tweak here and there within the Affordable Health Care Act. But for now, I think we have to go with what we voted for.'

The coalition has raised more than $37 million dollars to defeat Prop 45. It argues the measure would give one elected official, the insurance commissioner, too much power.

Consumer Watchdog's Jamie Court said it all comes down to a very simple question.

'Do you trust the California Nurses Association and Consumer Watchdog, or the health insurance companies?'

Tamara Kaplan doesn't know who to believe. But she's sure about one thing: she could take four trips every year for the money she's paying for health insurance.

'And I think four really good trips are much healthier for me than paying money out of my pocket for something, it's not intangible, but something I really don't reap all the benefits from,' she said.

As it stands now, health insurers can raise rates whenever they want.