BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 2042
                                                                  Page  1

          Date of Hearing:   May 5, 2010

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                    AB 2042 (Feuer) - As Amended:  April 20, 2010 

          Policy Committee:                              Health Vote:13-6

          Urgency:     No                   State Mandated Local Program:  
          Yes    Reimbursable:              No

           SUMMARY  

          This bill prohibits health plans and insurers from changing the  
          rates charged for individual health coverage policies more than  
          once a calendar year. This bill defines rates to include  
          premiums, copayments, coinsurance obligations, deductibles,  
          out-of-pocket costs, and any other charges for covered benefits.  


           FISCAL EFFECT  

          Minor absorbable workload to the California Department of  
          Managed Health Care (DMHC) and the California Department of  
          Insurance (CDI) to continue oversight of health plan and health  
          insurer product pricing. 

           COMMENTS  

           1)Rationale  . This bill is sponsored by Health Access California.  
            This bill prohibits multiple health coverage rate increases in  
            a single calendar year. According to the author and sponsor, a  
            large California insurer has increased rates in the individual  
            health insurance market more than 100% in one year. According  
            to the sponsor, there is no prohibition in current law to  
            prevent monthly pricing changes. This bill establishes a more  
            stable premium pricing structure for consumers and their  
            families. 

           2)Premium Increases in the Broader Insurance Market  . According  
            to supporters of this bill and other legislation to require  
            the regulation of rates, the country's 10 largest insurers'  
            have increased premiums 250%, or 10 times faster than  
            inflation over the past decade. The profits at the five  








                                                                  AB 2042
                                                                  Page  2

            largest insurers have grown more than 50% from 2008 to 2009.  
            In addition, one large California insurer has recently  
            garnered national attention by proposing to increase premiums  
            in the individual insurance market by up to 39%. This bill  
            addresses a portion of the increases in the individual health  
            insurance market. 

           3)Related Legislation  . AB 2578 (Jones), currently on the  
            Suspense File of this committee, establishes rate regulation,  
            effective January 1, 2012, of California health plans and  
            insurers under the jurisdiction of the DMHC and the CDI.


           Analysis Prepared by  :    Mary Ader / APPR. / (916) 319-2081