California Voters Reject Prop. 45 for More Controls on Health Insurance Rates

California voters rejected by a nearly 60 percent majority Proposition 45 that would have required the state insurance commissioner to approve proposed increases in health insurance rates for small groups and individuals.

In 35 other states, insurance commissioners already have authority not just to review health insurance rates but to approve premium hikes as well. California’s insurance commissioner, who is a statewide elected official, can only review the premiums.

The new state health insurance exchange, established under the Affordable Care Act negotiates rates as well as benefits and other details of plans listed by Covering California. Opponents of Proposition 45 claimed that giving the insurance commissioner power to veto rates would duplicate the “active purchasing” authority of the California health insurance exchange and “meddle” with health reform. Only five other states' exchanges are active purchasers, where the exchanges negotiate and ultimately approve premium rates and plan details. The exchange took no formal position. 

Insurance companies were reported to have spent over $37 million in their campaign to defeat the measure. The state’s nonpartisan Legislative Analyst’s Office reports data that only 16 percent of California’s population has small group or individual health insurance policies.

The campaign for the proposition was led by Consumer Watchdog, a group that has taken on the automobile and home insurance industries previously and reportedly spent about $6 million to pass the measure. They said more transparency was critical. 

Initial polling had shown Proposition 45 had popular support – 69 percent according the Field Poll in late June and early July, 2014. By late August support had dropped to 41 percent according to another Field Poll. On November 4, 2014, 40.2 percent of voters cast their vote for Proposition 45.