The threshold of 7% is based on the presumption that healthcare costs increase by between 4% to 6% annually, so anything above that would be considered possibly unreasonable, said Jerry Flanagan, Health Care Policy Director for Consumer Watchdog, an advocacy group that authored the bill for the lawmakers.
Additionally, the health plans would have to submit documents justifying the premium increase, including a list of insurance companies' top salaries, expenses they paid for the most expensive procedures, administrative costs, and other accounting details.
The bill was approved by the California Assembly Health Committee, but still has major legislative hurdles. It has been introduced three years previously and failed each time.
But Jones' chief of staff Janice Rocco thinks this time the California bill may have a better shot, propelled to a great extent by Anthem's 39% increase.
Rocco says that such legislation is essential once a state or a country requires that everyone buy health insurance. "Those states that did set up a requirement for everyone to buy health insurance found that the price [insurance companies charged for those plans] rose dramatically," she says.