Health insurers in California need to justify rates

Consumers enduring triple-digit health insurance increases will join Assemblyman Dave Jones (D-Sacramento) and consumer advocates to support Jones' legislation (AB 1554) requiring HMOs and health insurers to justify their rates and get approval for increases.

Jones' measure is especially important in light of a proposal by Gov. Arnold Schwarzenegger that would require all Californians to buy health insurance but allows insurers to charge whatever they choose.

The legislation is similar to requirements in the auto insurance market that have saved drivers $23 billion since 1988. The measure would control the type of administrative waste and profiteering that allowed Blue Cross of California to keep, as overhead and profit, 50% of every premium dollar collected from individual policyholders.

Consumer advocates said the reform is necessary regardless of whether proposals requiring Californians to purchase health coverage become law. FTCR will release new health insurance industry profit and overhead data at the press conference.

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