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Cost of Massachusetts Health Insurance Mandate to Rise 85% -- $400 Mil -- in '09; CA Mandate Proposal Certain to Face Similar Increases

Also, Big Pharma Gives $400K to Prop 93, Drops Opposition to Schwarzenegger/Nunez Health Bill After Plan Change

SANTA MONICA, Calif., Jan. 24 /PRNewswire-USNewswire/ -- A projected 85% increase in the cost of Massachusetts' mandatory health insurance law by 2009 should send up red flags that a similar California plan is also insufficiently funded, said the Foundation for Taxpayer and Consumer Rights (FTCR). Massachusetts costs will increase by approximately $400 million primarily because the state underestimated the number of new enrollees in state-subsidized insurance plans, the Boston Globe reported today.

California mandatory purchase legislation eliminated another opponent, the pharmaceutical industry, prior to a committee hearing in the state Senate yesterday. The companies dropped their opposition in response to an amendment that drastically weakens the bill's original mechanism for reducing drug costs, according to FTCR. At the same time, the drug companies' lobbying arm contributed $400,000 to Proposition 93 on Tuesday, the ballot initiative that would extend the terms of Senate pro Tem Don Perata and Assembly Speaker Fabian Nunez. The companies' new concern is being cut out of the benefit package, necessary according to the Legislative Analyst to hold down costs.

"Drug companies got the language they didn't like out of the healthcare bill and thanked the Speaker with $400,000 towards his term limits extension initiative," said Jerry Flanagan of FTCR. "This is more evidence that the healthcare bill is more about protecting politicians' power than California patients."

California's Legislative Analyst issued a warning that cost estimates in California are inadequate in testimony to the Senate committee, suggesting that proponents' estimate of the number of uninsured is too low. She also projected a $4 billion deficit in health plan financing in just five years if insurance premiums are just $50 a month more expensive than the Speaker and Governor's projections. FTCR called that a likely scenario given that nothing in the bill adequately limits premium increases by insurers and, as the Legislative Analyst contends, Speaker Nunez's cost projections are likely too low.

"The Speaker's mandatory health insurance scheme has no provision for inevitable increases in premium costs, and he has purposely low-balled the number of uninsured to make the numbers add up. The funding's just not there. When state financing fails, more of the cost burden will be borne by California families," said Carmen Balber with FTCR. "Massachusetts' mistakes should be informing the California debate, instead proponents are trying to sweep them under the rug."

Cost increases in Massachusetts are relevant to California, said FTCR, because they stem not from the plan's funding source (which differs between the states) but on assumptions about the health insurance market and the uninsured. Both states underestimated the number of uninsured when projecting costs, and the double-digit increases in the cost of health coverage that are projected in Massachusetts are another probability not considered by proponents of the California plan.

SOURCE Foundation for Taxpayer and Consumer Rights
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