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Consumer Group to Nunez: Massachusetts Mandatory Health Insurance Purchase Law Is No Model for California
Date:11/14/2007

SACRAMENTO, Calif., Nov. 14 /PRNewswire-USNewswire/ -- The vast majority of people required to buy unsubsidized private health insurance under Massachusetts' mandatory purchase law have failed to do so, according to an updated analysis by the Foundation for Taxpayer and Consumer Rights (FTCR).

A California proposal modeled on the Massachusetts law, by Assembly Speaker Nunez, fails to correct for the affordability crisis faced by Massachusetts residents. In fact, a provision of Nunez's proposal encourages insurance companies to raise rates. Under that proposal, insurers will be allowed to keep 15% of premium revenue for overhead and profit.

"Insurers, who will keep 15% of premiums no matter what they pay doctors and hospitals, will be all too happy to pay more -- and charge policy holders more -- in order to keep more," said Jerry Flanagan of FTCR. "Both the Massachusetts and California laws will inevitably lead to unaffordable costs for individuals and taxpayers."

Under the new Massachusetts law, by December 31, 2007, residents must be able to prove they have purchased private health insurance or face financial penalties. Coverage in Massachusetts is already much more expensive than promised and insurers, whose premiums are not capped or regulated, have indicated rates will increase again next year. Massachusetts Senate President Murray has proposed mandatory hearings into rate increases over 7%.

Massachusetts' law would require citizens to spend up to 10% or more of their incomes on health insurance. Co-pays and deductibles are not included in the 10%. Even at that stiff upper limit, the state estimates that 18% of the uninsured cannot afford insurance at all, including everyone making just over the subsidy cutoff of 300% of the federal poverty level. The same percentage of the uninsured in California would include over one million people.

"In just six weeks, Massachusetts consumers must have health insurance or pay a p
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SOURCE Foundation for Taxpayer and Consumer Rights
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