The state’s four largest insurance companies joined forces with doctor and hospital groups yesterday to launch an organization to fight tighter regulation of health insurance rates.

The Studio City based organization, Californians Against Higher Health Care Costs, launched earlier today to fight a ballot initiative being pushed by Santa Monica based Consumer Watchdog, a proponent the Insurance Rate Public Justification and Accountability Act.

The act would require health insurance companies to justify rate hikes and get approval for rate increases before they take effect. It would in effect extend to the Department of Insurance the power to set rates, the same way it sets rates for auto and homeowners policies. The measure would also give regulators the power to prohibit health insurance companies from passing on the cost of lobbying to policyholders.

The new organization said it has the backing of the California Medical Association, the California Hospital Association and the California Chamber of Commerce, among others.

California Watchdog alleges that the group is funded primarily by the state’s four largest health insurers: Anthem Blue Cross, Kaiser Foundation Health Plan, Inc., Health Net, Inc., and Blue Shield of California. “It’s Orwellian to see the big insurance companies hiding behind the lab coats of doctors,” Jamie Court, president of Consumer Watchdog., said in a prepared statement.

The new organization, in turn, called California Watchdog a “special interest group with funding ties to trial lawyers.” It said the measure would “add layers of regulation to health care on top of existing federal and state regulations, create a costly new bureaucracy, and give one politician (the state insurance commissioner) nearly total control over health care coverage and prices, ultimately leading to higher rates and less access to care for consumers.”

California Watchdog shot back in its own press release stating “the insurance companies are scared because we are on the road to qualify our ballot measure that forces them to publicly justify their rate hikes and lets the insurance commissioner reject unreasonable rates.”

Proponents of the measure need to collect more than 500,000 registered voter signatures by May to get on the November statewide ballot.

Judy Temes

Read more about the development in the March 19 issue of the San Fernando Valley Business Journal.