After defeat, Calif.'s Prop. 45 backers vow to fight on

By the time the vote rolled around on Tuesday, perhaps it wasn’t so surprising that voters had soundly rejected Proposition 45.

Had it passed, the ballot measure would have given California’s insurance commissioner the power to reject health insurance rate increases. But on Tuesday, only 40 percent of voters said yes. 

Polls over the summer showed the initiative as popular among Californians, with nearly 70 percent in favor. But then insurance companies put the weight of money — $57 million worth — behind efforts to bring it down. In comparison, the measure’s supporters only raised about $4 million.

Jamie Court, president of Consumer Watchdog, also blamed low voter turnout and a nationwide backlash against progressive measures for Proposition 45’s defeat. His organization sponsored the initiative, which only would have applied to the individual and small-group insurance markets. 

Court predicted insurance rates for those groups would now rise. Rates rose by only 4 percent for 2015, but he said the modesty of the increase was likely due to fears by insurance companies about the upcoming election.

“We believe the insurance companies were restrained because of the threat of Proposition 45,” Court said. Higher rates would have encouraged more people to vote for the initiative, he said.

“Now that insurance companies don’t have to worry, we will see steep increases [at] the first opportunity they have to raise rates,” Court said.

Insurance companies argued that Proposition 45 would negatively interfere with the California’s state health exchange, known as Covered California. Critics said it would give the insurance commissioner too much power and add bureaucratic layers that could slow down and harm the year-old exchange established under the Affordable Care Act (ACA).

“This was a huge threat to health reform in the state, so I’m very, very glad that we’ve batted it back,” said Micah Weinberg, senior policy adviser to the Bay Area Council, in The Press Enterprise. The Bay Area Council opposed Prop 45 along with hospitals, doctors, firefighters and other business groups. 

Gerald Kominski, director of the UCLA Center for Health Policy Research agreed.

“If it had passed, I think it would have been bad,” Kominski said.

Had it passed, Kominski said insurance commission reviews and consumer lawsuits made legal under the new law could have introduced worrisome delays to the open enrollment season, which runs for only three months a year, from November through January. And that could have destabilized the fledgling Covered California, which offers insurance subsidies for those with incomes less than four times the federal poverty level. (The Medicaid expansion covers those making less than 138 percent of the poverty level.)

In today’s market, Kominski said Proposition 45 is not needed for keeping rates in check. He said ACA already offers protections. First, Covered California has the ability to negotiate aggressively on behalf of the 1.5 million people it insures. Those negotiations also influence rates for products outside the Covered California market, since insurance companies must offer identical plans to consumers who purchase insurance either inside or outside the exchange.

In addition, Kominski said the ACA puts a cap on profits. Eighty cents of every premium dollar for individual and small group insurance must go toward medical benefits. The law also requires insurers to document how premiums are spent, and that increases transparency, he said.

“The whole marketplace has changed dramatically,” Kominski said. “The supporters of Proposition 45 crossed over that fact.”

Jamie Court from Consumer Watchdog disagrees. He would like the legislature to write a bill this year giving California’s insurance commissioner the power to regulate rates. And if that doesn’t happen, he plans on getting another initiative on the ballot, possibly in two years.

“We will certainly fight on,” Court said.

Photo by CA Dept of Insurance via Flickr.