A legislative override of the governor’s budget veto is looking likely. And if the governor follows through on his threat to veto all the bills sent to him in retaliation, Californians will be saved from lots of onerous, dangerous new laws. One of those new laws is AB 1945.
This bill expands opportunities for trial attorneys to sue health insurers and creates a strong incentive for the unscrupulous to defraud health insurance companies. The end result would be higher premiums for everyone, pricing more Californians out of the market and eliciting calls by the Left to "reduce rising costs" by moving toward a single-payer system—e.g., government-run health care.
Unsurprisingly, AB 1945 is a Democratic bill. But nine Assembly Republicans actually voted for this step towards socialized medicine: Todd Spitzer, Tom Berryhill, Greg Aghazarian, Paul Cook, Bonnie Garcia, Shirley Horton, Guy Houston, George Plescia and Jim Silva.
AB 1945 started as a reasonable health insurance bill before being hijacked by the Consumer Attorneys of California (CAOC) back in July. As originally written, the bill permitted insurers to void someone’s health insurance policy only if an independent third party reviewer determined that person had lied about material facts on their health insurance application. The finding was binding on insurers, and the person whose policy was voided could even then go to court if he disagreed with the third party review.
That wasn’t enough for the CAOC. Once the trial lawyers got through with it, AB 1945 had morphed into a recipe for fraud and litigation. Under the CAOC’s new and un-improved AB 1945, if it turns out someone lied on their application, the insurer cannot void the policy unless they prove that person intentionally misrepresented or omitted information. Demonstrating someone’s state of mind when filling out an application is a near impossible burden of proof. This is an invitation to fraud and abuse, and is designed to force insurers to settle litigation, even when the facts are clearly on the side of the insurer.
And that’s not the worst part of this bill.
If someone stops paying their insurance premiums – or commits fraud by selling their insurance card—the insurer has to obtain the state’s permission to cancel the coverage–-and the process for doing so is so sluggish, insurers could wind up providing “free” coverage for up to 6 months. Of course, it’s only free to the deadbeat policyholder, because that cost gets passed on to those of us who pay our bills in the form of higher premiums. Obviously, this incentivizes the unscrupulous to put off buying insurance until they need a medical procedure. This is known in the industry as “one premium surgery.”
Try to defraud Medicare or MediCal in the same manner and you’d go to jail. But apparently private insurers are fair game for fraud and litigation. We expect this kind of legislation from Democratic legislators; their anti-business ideology goes hand-in-hand with the trial bar’s agenda. But if Republican legislators are going to help the Democrats pass anti-business, anti-consumer legislation like AB 1945, we have to ask ourselves what is the point of electing these Republicans?
The Republican brand of smaller, responsible government is already damaged and Republican elected officials clearly don’t help this problem by voting like Democrats. AB 1945 needs to be vetoed by the governor. And Republican voters need to hold accountable the “AB 1945 Nine” for their votes in favor of this awful legislation and their support of greedy trial lawyers.
September 18th, 2008 at 12:00 am
Meredith, you claim that if people stop paying their insurance premiums, that AB 1945 will force insurance companies to continue to pay for their coverage. Nothing could be further from the truth. In fact, the author of the bill submitted a letter that was printed in the Assembly Journal to make it unequivocally clear that this bill does not, nor was it ever intended to, impact a health plan’s or insurer’s ability to cancel a person’s coverage because the person failed to pay for the coverage. Nowhere in the language of the bill does it even address cancellations for failing to pay premiums. I’ve written about this bill on my blog a few times this past week and today I posted Assemblyman De La Torre’s letter which explains that AB 1945 does not change the existing Health & Safety Code Section 1365 (a) (1), which provides that a health plan can cancel an enrollee’s coverage if the enrollee/subscriber failed to pay the charge for the coverage. It simply lays out the regulatory process for canceling or rescinding coverage based upon information that was, or was not, provided during the application process. Please read the bill.
September 18th, 2008 at 12:00 am
Well, I scanned the bill and it looks like point to Spitzer. Granted some attorney will probably cite some language in the bill to show me how I am wrong. But for now, it looks like an appology is due to Assemblyman Spitzer.
September 23rd, 2008 at 12:00 am
So let me get this straight. This bill was so well written that Todd Spitzer had to have a separate letter submitted explaining what the bill meant. Give me a break. Will a judge follow the law as written or what a legislator thinks it means. We deserve egislators that pass, plain simple laws that mean what they mean. Meredith is right on the money. Spitzer and these guys really don’t know what they are doing to mess up our lives. Both Todd and his apologist Andy owe the people of California an apology.
October 6th, 2008 at 12:00 am
Hey Todd and Andy, even this most liberal of Governors saw through your bill. Check out parts of his VETO message:
“Unfortunately, the
provisions of this bill will only increase costs and further restrict
access for over 2 million Californians that currently obtain
coverage in the individual market.”
“This bill was written by the attorneys that stand to benefit from itsprovisions. In rushing to protect a right to litigate, the
proponents failed to consider the real consumer protections that are
needed.”