Consumer and Worker Coalition Unveils Bills to Lower Premiums and Shine a Light on Health Care Cost Drivers for 10 Million Californians

February 19, 2019

Sacramento, CA – A coalition of health care, consumer and worker advocates today announced the introduction of two bills that could deliver savings to 10 million Californians with employer-based health insurance and increase transparency in health care pricing. The two bills, AB 731 by Assemblymember Ash Kalra (D-San Jose) and SB 343 by Senator Richard Pan (D-Sacramento), come as the U.S. debates the next round of reform following the Affordable Care Act. Despite coverage gains, people across the nation still struggle to afford monthly premiums and put off doctors’ visits and tests because they can’t afford co-pays and deductibles. Unsustainable insurance costs are eating into wages for all workers, but the biggest bite is being taken from workers with the lowest wages, according to a recent report from the Economic Policy Institute. Yet, the health care industry—hospitals, health plans, insurers, drug companies—is profiting from increased coverage and rising prices.

Under AB 731 (Kalra), existing rate review for health plans and insurers on individual and small group markets will be extended to plans purchased in the large group market.  The bill expands the “rate review” process, requiring insurance companies to disclose what is driving rising premiums, co-pays and deductibles for workers. If state regulators deem rate increases as unreasonable or unjustified, insurance companies must notify the large employer or union trust fund that purchases the coverage. Since a similar law (SB 1163, Leno) went into effect for individual and small business plans in 2011, consumers have saved an estimated $226 million. Large employers and workers could save even more. The bill is cosponsored by the California Labor Federation, UNITE HERE, SEIU California State Council, Health Access California and the California Teamsters Public Affairs Council.

“The skyrocketing cost of health care is contributing to wage stagnation and fueling income inequality in our state. Many are struggling with ever rising co-pays and health insurance premiums that have risen 249% since 2002—more than six times the increase in the state’s overall inflation,” said Assemblymember Kalra. “That is why I introduced AB 731, building upon rate review that’s already working for millions of workers and using this proven tool for greater transparency and scrutiny on unreasonable health insurance rates. Consumers are in desperate need of relief and Californians deserve a clearer picture of what’s driving health care costs.”

“Rising health care costs are stealing workers’ wages,” said Art Pulaski, Executive Secretary-Treasurer of the California Labor Federation. “As demonstrated in a recent Economic Policy Institute report, if health insurance premiums had not increased as a share of average earnings, workers would have had an increase in annual pay of 8.6%, or $3,032 for individuals or $9,161 for family. That’s $9,161 that families could have spent on food, housing, education, countless other necessities. The insurance industry negotiates with doctors and big hospital and drug corporations on our behalf. AB 731 will get to the bottom of what is driving our rising health care costs.”

“Last fall, our members went on strike for 61 days because we believe one job should be enough to live with dignity and respect when you work for the largest hotel company in the world,” said Anand Singh, President of UNITE HERE Local 2, the hotel and restaurant workers union of San Francisco and San Mateo. “But the mercenary high price of health care is threatening to turn that historic strike into a simple transfer of wealth from a hotel corporation to health insurance corporations. If health care costs had only grown as fast as the cost of living since 2000, hotel workers would be making $7,000 a year more. That’s money that should be in workers’ pockets, not insurance, hospital and drug companies’ CEOs bank accounts.”

“SEIU California is fighting for new and expanded healthcare price and quality transparency information from healthcare providers in order to lower the cost of healthcare,” said Roxanne Sanchez, President of SEIU Local 1021 and SEIU California. “We know families can’t keep stretching their paychecks to cover unjustified insurance costs and our state won’t achieve our vision for universal, accessible, affordable and equitable care until we tackle unjustified skyrocketing health care prices.”

“Health care premiums continue to rise for all Californians, yet the ten million who work for larger employers don’t have the benefit of the state reviewing those rates to ensure they are reasonable. California consumers have saved hundreds of millions of dollars with existing authority, and this would expand rate review protection to three times the people,” said Anthony Wright, executive director of Health Access California, the statewide health consumer advocacy coalition. “This bill also improves and enhances oversight for all California health consumers. By revealing how much providers are getting paid as a percentage of Medicare rates, we can better explore the drivers of high health costs and the effectiveness of insurers in negotiating better prices.”

“The California Teamsters Public Affairs Council is a proud co-sponsor of AB 731 by Assembly Member Ash Kalra. AB 731 will require large healthcare plans to provide greater transparency in pricing; thereby allowing large purchasers like union trust funds to negotiate more competitive rates for our members and all Californians.”

SB 343 (Pan) updates current transparency and disclosure requirements for the health care industry to include Kaiser Permanente.  Kaiser’s status as an integrated system of insurance, hospitals and doctors means the health care giant falls outside some key disclosure requirements. This exemption in state law has allowed them to not report key insurance and hospital financial information like the rest of the industry. With Kaiser representing one in ten California hospitals and more than 40 percent of insured Californians with commercial coverage, this information gap means state regulators lack data on a significant portion of the health care market.  When Kaiser is required to report the same data as its competitors, regulators can make “apple to apple” comparisons of health care pricing.  This means greater transparency for the public, advocacy groups and regulatory agencies concerned with health care costs affecting all Californians, and for the significant portion of Californians covered by Kaiser.

“Kaiser and all other health insurers and hospitals in California should play by the same rules for transparency,” said Dr. Richard Pan, state senator representing the Sacramento region. “Consumers need clear pricing and financial information so they are able to make informed choices regarding the value of their health coverage.”