Approval of Healthcare Insurance Rate Changes. Initiative Statute.
On August 23, 2012, the initiative measure "Approval of Healthcare Insurance Rate Changes. Initiative Statute." ("Initiative") qualified for the November 2014 Statewide Ballot. In short, this Initiative seeks to subject health insurance to the same rate filing requirements in California that apply to most property and casualty lines of insurance. Subject to a few additional requirements set forth below, the Initiative would in effect require health insurance products to comply with the prior approval process established by the 1988 ballot initiative, Proposition 103.
The Initiative would make health insurance subject to prior approval by the Commissioner. By its terms, the Initiative would require all health insurance rates proposed or in effect after November 6, 2012 to satisfy the formulaic "excessive/inadequate" rate limitations currently applicable to most property and casualty lines of insurance. For rates in effect on or before January 1, 2014, the Initiative would permit the Commissioner to require insurers to refund with interest rates that are later determined to be excessive.
Unlike existing law, the Initiative would require the Commissioner to review and approve most health insurance products - including health care service plans traditionally regulated by the Department of Managed Health Care. The prior approval requirements of the Initiative would not apply, however, to large group health insurance policies or insurance contracts excluded by either Insurance Code section 10181.2 or Health and Safety Code section 1385.02.
Additionally, the Initiative would explicitly prohibit the use of a person's prior insurance coverage or a person's credit history as a criterion for determining an insurance rate or for determining eligibility for an insurance policy. In order to fund the added costs required to administer this Initiative, health insurance companies would be required to pay a fee to cover these costs.