27 March 2007

The Honorable Dave Jones
State Assembly
State Capitol
Sacramento, CA 95814

Re: AB 1554 (Jones) Health Insurance Rate Increase Oversight

Dear Assemblymember Jones,

CALPIRG is strongly supportive of the concept of insurance rate oversight outlined in SB 1554. As California embarks upon fundamental reforms to its health care system, we appreciate all efforts to contain and justify the costs of health insurance.

With health insurance rate increases far outpacing the rate of inflation and nearly 7 million Californians without coverage, consumers and decisionmakers alike deserve better information and justification for this rapid increase in costs. A recent study from The Commonwealth Fund indicates that the dramatic increase in insurer overhead and profits is both out of sync with global prices and increasingly worrisome:

In the U.S., insurance-related administrative costs per person and as a percent of national health expenditures are the highest in the world and rising rapidly. The difference between premiums and claims payments – that is, net insurance administrative costs and profits – has increased 75 percent over the past five years.”

To truly limit the exponential growth in health care costs and achieve meaningful health care coverage expansions, health insurers must be held to account for these increases. CALPIRG appreciates your work on this issue and looks forward to supporting AB 1554 as soon as the language is more fully developed.


Sincerely,

Steve Blackledge
Legislative Director