AB 2578 (Jones/Feuer):

Summary of Bill: 2578 would require health care service plans and health insurers to file a rate application for a rate increase that will become effective on or after January 1, 2012, for review and approval by the Department of Managed Health Care and the California Department of Insurance. Carriers would be permitted to submit only one rate application each calendar year.

Talking Points:
     • Unlike auto insurers who are required to seek prior approval from the Department of Insurance before increasing auto insurance rates, HMOs and health insurers have no similar requirement.
     • Some highly profitable health insurers and HMOs transfer large blocks of funds to out-of-state parent companies while continuing increase rates for on California consumers.
     • AB 2578 will give the state a powerful tool to control unabated rate increases from HMOs and health insurers.