Prop. 45 Defeated by Health Insurance Industry

The law would require health insurers to publicly disclose and justify their rates. (Getty Images)
The law would require health insurers to publicly disclose and justify their rates. (Getty Images)

Update, 12:30 a.m.
At first glance, Proposition 45 seemed like a no-brainer for consumers. The measure would have given the state’s insurance commissioner the authority to reject excessive rate hikes in health insurance sold on the individual and small-business markets.

Consumers who had seen their premiums go up by double digits year after year clung to Prop. 45 as the savior.

“I felt like a frog in hot water that got hotter and hotter until it was boiling,” says Josh Libresco, a market researcher who has bought health insurance for his family on the individual market for 20 years.

But consumer voices like this were overwhelmed in the conversation around Prop. 45 by health insurance companies, including Kaiser and Blue Cross Blue Shield, which raised $43.6 million to defeat the measure. The proponents raised just $2.5 million.

“Health insurance companies have a tremendous economic stake in the outcome,” says Daniel G. Newman, president and co-founder of MapLight, a nonpartisan research organization that tracks the influence of money on politics. “There’s also billions of dollars at stake for health care consumers, but consumers don’t have millions collectively to put in favor of a ballot measure.”

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The No side was further bolstered by concerns raised by Covered California, the state agency tasked with implementing the Affordable Care Act in California. Board members and staff discussed various complications that could arise from Prop. 45 and complicate Covered California’s ability to carry out its mission, pitting the agency against the current commissioner, Dave Jones, in an unusual dispute between allies.

The agency negotiates rates with insurers directly, and feared that a challenge to those rates under Prop. 45 could undo that work, delay final rates beyond federal deadlines or even cause insurers to withdraw plans from the state marketplace.

Insurance companies made Covered California an unlikely bedfellow, weaving its concerns into the industry’s ad campaign and urging people to vote no on Prop. 45 to "protect the Affordable Care Act."

The influence of that campaign appears to have worked with voters. A poll from the middle of the summer showed 69 percent of likely voters favored Prop. 45 and giving the commissioner more power to control health insurance rates.

By election night, that support slipped to just about 40 percent.