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Monday, May 29, 2023

Declaring War on Small Business

Federal data released this month shows that health care spending growth is at the lowest point it has been in 50 years, for the third year in a row. Here in the San Fernando Valley you wouldn’t know it. Anthem Blue Cross, the Woodland Hills-based subsidiary of Indianapolis’ Wellpoint Inc., just imposed an average 10.6 percent rate increase on its small business customers, impacting companies with more than 280,000 employees across the state. Last week, a review by actuaries in the California Department of Insurance found that Anthem’s premium hike is unreasonable and is not supported by the data. Despite this, Anthem is going ahead with the double-digit increase that will cost small business owners and their employees at least $13 million. How can Anthem snub its nose so easily at state regulators, when most businesses in California work hard to follow the rules and are held accountable when they don’t? California is one of the few states in the country where the insurance commissioner has no power to stop an excessive or unreasonable rate hike. Just four insurance companies control 71 percent of the market in California, and they use that market power to set prices at will. Employer-based family health insurance premiums have gone up 153 percent in California over the last decade, while inflation rose just 29 percent over the same period. Anthem is hardly the only culprit. The three other top insurers in California – Kaiser, Blue Shield and Health Net – also raised rates this month by as much as 23 percent for small companies with 50 or fewer employees. Laurel Kaufer runs her own mediation business in Calabasas. As a self-employed single mom with two sons, she’s struggled for the last decade to balance the cost of health care and health insurance with the need to seek medical help for her family. In that time, their monthly premiums have tripled to $1,136. She is dumbfounded by the fact that although her insurance company requires pre-approval every time she wants her health care paid for, it still does not have to seek approval when it wants her to pay more. Health insurance can be any small company’s biggest expense. Yet while big companies with thousands of employees can bargain with insurance companies, small business owners have little leverage and are stuck with the premiums insurance companies quote. This means hard choices for small businesses in the Valley and across California, as more and more revenue is diverted to employee health care, even as the level of health benefits in these insurance policies is reduced. Some companies are forced to forgo coverage entirely. The number of California businesses offering health insurance fell from 73 percent to 63 percent in just two years, between 2009 and 2011. Most of those dropping coverage were small employers. For the last decade, the insurance lobby has blocked efforts in the legislature to rein in unjustified health insurance price increases, arguing that the market and federal health care reform can be trusted to moderate rates. The millions of small businesses and California families facing a new round of rate hikes this winter show that more must be done. That’s why consumer advocates like myself joined with Sen. Dianne Feinstein and Insurance Commissioner Dave Jones to qualify a ballot measure for the next general election ballot that will let voters decide whether health insurance companies should have to publicly justify and get approval for rate increases before they take effect. The Insurance Rate Public Justification and Accountability Act would give the insurance commissioner the power to stop unreasonable rate hikes like the increase Anthem imposed on small businesses this month. California already applies the same rules to auto, home and business insurance companies. They have resulted in $62 billion in savings for California drivers, according to the Consumer Federation of America. With the cost of health insurance spiraling out of control, and federal health reform on the verge of requiring everyone to have coverage, California families and small businesses deserve the same protection from excessive and unreasonable health insurance rates. The good news is that, if the ballot measure passes, health insurance companies can be required to pay refunds for any excessive premium increase that takes effect today. But that won’t be soon enough for some struggling small businesses that could be priced out of their health insurance by the latest double-digit rate hike before rebates come. Carmen Balber is the executive director of Consumer Watchdog, a Santa Monica-based consumer education and advocacy organization.

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