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Los Angeles Business Journal

Health Costs; Is it the time right in California to institute a prior approval system for health premium increases?

by Laurence Darmiento
Jan 13, 2003

Is the time right in California to institute a prior approval system for health premium increases?

The Foundation for Taxpayer & Consumer Rights thinks so.

Under such a system, health insurers would have to seek approvals for rate increases from the state, much the way auto, property and casualty insurers now do. It also would allow consumers and others to file objections to proposed rate increases.

With health insurance premium increases in the double digits and even business groups starting to call for reforms, the foundation plans to announce this month that an influential California legislator has agreed to carry a bill for them that would create such a system.

The foundation is preparing a report it says will show that 10 states with prior approval processes for health insurance have seen a slower rise in their premium costs, said Jerry Flanagan, an official with the Santa Monica-based foundation.

Michael Chee, a spokesman for Blue Cross of California, the state's largest for-profit HMO, said prior approval would not work well with health insurance, since costs change rapidly in the health care market place and the most successful insurers react quickly to changing costs.
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Laurence Darmiento can be reached at (323) 549-5225 ext. 237 or at ldarmiento@labusinessjournal.com