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Speaking softly, Joseph Villela plunged into one of the Legislature’s loudest fights by telling of his mother’s plight.

By 2008, her monthly health insurance premium had soared from $150 to $800 in four years.

“She had to decide between paying for the mortgage of the house and her medical insurance,” Villela told the Senate Health Committee last week. “In the end, she dropped her coverage.”

The Monterey Park resident praised Assembly Bill 52, which would give the state the authority to approve, deny or modify excessive health insurance rate hikes much as regulators do now with auto insurance.

The bill is a lightning rod for many of the Capitol’s most influential interest groups, pitting consumer, labor, small business and health care advocacy groups against the California Chamber of Commerce and hospital, physician and health insurance associations.

State regulators already have authority to assess whether proposed rate hikes are reasonable, but the process has no teeth because insurance firms can impose them regardless.

Assemblyman Mike Feuer, D-Los Angeles, points to Anthem Blue Cross, which recently lowered proposed premium hikes for some members but not for a bloc of 120,000, whose rates rose 16 percent even though the state deemed that unreasonable.

“This bill is at the heart of what’s important to families,” Feuer said.

State Insurance Commissioner Dave Jones, whose powers and those of the state Department of Managed Health Care would expand under AB 52, said insurance firms “hold all the cards” now on rate hikes.

“California businesses and consumers are at their mercy,” he said.

Opponents counter that AB 52 is a simplistic response to a complex problem and could backfire by raising regulatory costs, slashing investment in equipment and reducing the number of doctors accepting Medi-Cal patients.

“It’s too much, too soon, too quick,” said Dustin Corcoran, head of the California Medical Association.

Feuer’s bill would jeopardize revenue without curbing root causes of rising health care costs, including an aging population, increased obesity, medicinal costs, meager Medi-Cal reimbursement rates, and economic desperation that leaves millions of Californians unable to pay for care, critics say.

“As dysfunctional as our health care system is, it’s still a system, and you can’t touch one part of that system without impacting other parts,” said Lisa Folberg of CMA.

Teresa Stark, of Kaiser Permanente, said the bill would suck millions out of health care and that lawmakers should take heed of physicians’ Hippocratic oath and “do no harm.”

“It’s too risky,” she said.

Nonsense, counter supporters. They point to a letter to the Senate from Teresa Miller, Oregon’s insurance administrator, who said “we have no evidence that our rate review process has been detrimental to providers.”

In determining whether a rate hike is “excessive,” “inadequate” or “discriminatory,” California regulators would be required to consider factors ranging from overhead and administrative expenses to investment income and rate of return.

Thirty-five states, including Oregon, require some form of prior rate approval by state regulators.

The Assembly Appropriations Committee estimates that AB 52 would raise regulatory costs by more than $30 million per year, though Jones calls that estimate high. Funding would come from state fees, perhaps with some federal subsidy, but not from general funds used for basic public services.

Supporters characterize AB 52 as a significant step forward, not a cure-all. Opponents say it would make a bad situation worse.

Both sides sympathize with Californians caught in the squeeze of high premiums. Dolores Duran-Flores of the California School Employees Association, for example, told lawmakers of a colleague in her union, a single mother of two teenage sons, whose rate hikes prompted a moral dilemma.

“Her premiums increased so much that she could no longer afford family coverage and still feed and house her family, so she had to choose which son to cover,” Duran-Flores said.

“But she ‘chose’ the wrong one. Weeks after making that change and dropping the one son, he was in an auto accident. Now she is facing bankruptcy as a result of the medical debt,” Duran-Flores said.

Health insurance premiums in California have risen 134 percent since 2002, more than five times the overall rate of inflation, according to a 2010 statewide survey of employers cited in an analysis of AB 52 by the Senate Health Committee.

Annual premiums averaged $14,396 for family coverage and $5,463 for individuals last year, the analysis said.

Sparring over AB 52 comes in the wake of economic recession and high unemployment, three years before implementation of a health care overhaul that will require most Americans to buy medical insurance or face tax penalties.

A key test will come Wednesday, when the Senate Health Committee, which is clearly split on the measure, will cast its votes.

Feuer’s bill passed the Assembly, 45-28, with no Republican support. A similar measure last year, by Jones, died in the Senate.

“I’m a free-market person,” said Assemblyman Chris Norby, R-Fullerton. “I think if we have open competition, these things are ultimately best decided by the marketplace.”

Both physicians in the Assembly, Fresno Republican Linda Halderman and Sacramento Democrat Richard Pan, voted against AB 52.

Gov. Jerry Brown has not yet taken a position.

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