The 3 bills below address a new right to a Medigap policy without a health screening, and oversight and regulations regarding health insurance and long-term care insurance premium rate increases. Join us in supporting the swift passage of these bills by contacting your local California State Representatives today.
AB 151 – Adds the right to a Medigap when premiums increase in Medicare Advantage (MA) plans
AB 151, introduced by State Assembly member William Monning, will give beneficiaries an additional guaranteed right to purchase a Medigap policy without a health screening. Under current law, beneficiaries have guaranteed rights to a Medigap policy following certain events, including the loss of previous health benefits from another system such as an employer or Medi-Cal. (See our section: Your Rights to Purchase a Medigap Policy for a list of all guaranteed issue rights). They also have the right to a Medigap policy if an MA plan drops their treating provider from the plan’s network or increases copayments, but not premiums. Currently a Medicare beneficiary can only exercise this right if their MA plan also issues Medigap coverage, which some companies providing Medicare Advantage plans do not. This means that for some beneficiaries who are in MA plans sponsored by companies that do not also sell Medigaps, this right is of little use to them.. Adding the right to purchase a Medigap from other companies when MA plan premiums increase, would extend protection to more beneficiaries.
AB 52 – Gives the Insurance Commissioner and the Department of Managed Health Care the authority to review health insurance premium rates and deny or modify proposed rate increases
For many years, older consumers have been subjected to a steady onslaught of premium increases as they struggle to hold on to their health insurance coverage until they are old enough for Medicare. Many of these individuals and their families have accepted huge deductibles and large copayments in an attempt to reduce their accelerating premiums, and some have been forced into medical bankruptcy.
AB 52 will give the Insurance Commissioner and the Department of Managed Health Care new tools to ensure that health insurance rates have been reviewed, are fair, and are not excessive or unfairly discriminatory. The authority to review rates and deny or modify rates is essential for state regulators to ensure that health insurance sold in this state is fairly priced.
AB 999 – Implements new strategies to control long-term care insurance rate increases
AB 999 takes some significant steps forward in attempting to stabilize a market that has been tarnished by rate increases, some as high as 60%, and others in smaller annual amounts spread over a period of years. This bill offers some new approaches to stabilization in response to previous failed attempts, namely long-term care rate stabilization standards included in the National Association of Insurance Commissioners’ (NAIC) model. This model formed the foundation for SB 898 which became law more than a decade ago. Some of AB 999’s new approaches include the following requirements:
- Prohibit rate increases more frequently than once every 5 years for pre-stabilization policies and 10 years for post-stabilization policies. Limiting rate increases to specified time periods may put insurers on notice that rate increases will be examined more carefully and will be harder to get. However, the Department of Insurance will have to ensure that companies don’t’ store up rate increases knowing they have a window of opportunity to impose an increase every 5 or 10 years.
- Establish that a company may not target a lifetime loss ratio lower than the higher of the minimum required by law and the target loss ratio disclosed in a past rate filing by the company. This may reduce the likelihood of an insurer using a low balled “teaser rate” in an attempt to gain market share from its higher priced competitors.
- Require that rate increase filings take into account the experience across all forms of LTC policies written by that insurer and its affiliate, thereby pooling the successful and unsuccessful experiences of both current and past LTC insurance products. Insurers would be required to base a rate increase upon experience spread across all forms of LTC policies written in the state to discourage companies from rapidly closing off certain products of business while introducing new products with minor variations.
- Establish that, for new policy pricing, the insurer cannot shift the impact of the insurer’s poor investment results on to the insured. When an insurer overestimates anticipated investment return, the shortfall is often passed onto consumers in the form of a rate increase to make up the difference. Insurers, not consumers, should bear the consequences of less than expected investment return.
- CHA supports AB 999 in the hopes that these changes will prevent continuation of this cycle of premium increases that have to be paid by policyholders, often close to the time they need care and want to tap their benefits. Neither consumers nor the state’s Medicaid program benefit when consumers invest for many years in high priced coverage that is lost shortly before they need to use their benefits, or when consumers exhaust their resources in an attempt to retain their high priced coverage.
