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Hikes in health insurance rates could be denied by state commissioner if Prop. 45 passes

on October 24, 2014

Proposition 45, a November ballot measure empowering the state’s elected insurance commissioner to rule on health insurance rate hikes, is drawing heated debate and hefty donations from Oakland groups with a stake in health care.

Covered California, the exchange where Californians select health insurance plans, sets healthcare standards that must be met by the insurers, and currently allows for selective contracting with insurance companies. But no agency yet has the power to directly approve or reject rate increases.

Insurance Commissioner Dave Jones speaks about Prop. 45 at UC Berkeley. Gabriel J. Sanchez

Insurance Commissioner Dave Jones speaks about Prop. 45 at UC Berkeley. Gabriel J. Sanchez

Prop. 45, the Public Notice Required for Insurance Company Rates Initiative, would change that, following in the footsteps of Prop. 103, which in 1988 set up a system for defining when car or life insurance rates are excessive. “It’s not a specific rate or cap,” said the measure’s main proponent, Insurance Commissioner Dave Jones. “[It] looks at the medical costs, the insured utilization, the administrative costs, their profit, and then determines what rate they need in order to cover future claims and make a reasonable profit.”

Health insurance rates have risen 185 percent in the last decade, according to the Secretary of State’s (SOS) official voter guide. So far, about $37 million has been contributed to No on 45, while just under $6 million has been contributed to Yes on 45, according to the latest campaign filings with the SOS.

A view of the Kasier complex from Lake Merrit.

A view of the Kasier complex from Lake Merrit. Gabriel J. Sanchez

“Voters are going to see a ton of deceptive TV ads from the health insurers,” Jones said. “They should know that it’s the health insurers that are opposing the initiative, and that it’s consumer groups that are supporting Prop. 45.”

Among the principal players based in Oakland, Kaiser Foundation Health Plan Inc. has donated $15 million to defeat the proposition. The Northern California Carpenters Political Action Committee donated $20,000 in support of the proposition.

On opposing sides of the debate are two nurses associations: the California Nurses Association (CNA) in support of the proposition, with a $1 million donation to try to help its adoption. “I understand that unions get accused of being self-interested all the time,” said Martha Kuhl, a registered nurse and secretary-treasurer of CNA, which represents about 86,000 nurses in the state. “But I want to say that nurses are required by our license and by our calling to advocate for our patients.”

California Nurses Association a proponent for Prop 45 sits around the corner from Kaiser headquarters

California Nurses Association a proponent for Prop 45 sits around the corner from Kaiser headquarters. Gabriel J. Sanchez

But the the American Nurses Association California (ANAC) opposes adoption of the measure. “On one hand, we can keep the new independent commission, established last year to negotiate rates and benefits for consumers and reject plans that are too expensive,” Candace Campbell, a registered nurse with ANAC, said in a radio ad. “On the other, we have Prop. 45, that will give one politician the power to override the rate and benefits negotiated by the commission.” ANAC has approximately 4,500 members and on its webside describes itself as the only professional organization that represents the interests of all registered nurses, regardless of specialization, clinical setting or work environment.

Kuhl of CNA disagreed with ANAC’s position, saying that consumers are at the mercy of large insurance companies whose rates continue to go up. About 88 percent of California’s health insurance market is controlled by five insurance companies: Kaiser, Anthem Blue Cross, Blue Shield of California, Health Net and United Healthcare.

The California Association of Retired Americans (CARA), another advocacy group based in Oakland, is urging East Bay voters to support Prop. 45 and take a stand against large insurance companies. Hene Kelly, CARA’s legislative director, said the proposition would help retired Californians. “Especially in Oakland, where there are a lot of working class people, it will make a difference when they retire,” she said.

Although many retired people have Medicare, Kelly said, they still have to pay a supplement, and rates for supplements go up each year.

Early voting is already underway in Alameda County, and residents can begin mailing in their ballots or find their polling place at the Registrar of Voters of Alameda County at


Illustration by Jeremy C.F Lin

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  1. Minivet on October 24, 2014 at 3:29 pm

    The second paragraph implies Covered CA has jurisdiction over all insurers. In fact, I’m pretty sure that if a company doesn’t want to sell a plan on their site, Covered CA has no power over it, although many other ACA regulations apply. There are millions of Californians whose plans are not sold through the site, which is one of the reasons I find CovCA’s concerns rather petty.

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