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Massachusetts Mandatory Health Insurance Purchase Law is No Model for California
Date:10/12/2007

SANTA MONICA, Calif., Oct. 12 /PRNewswire-USNewswire/ -- Massachusetts is not a model for California health reform, according to an analysis of that state's law requiring all residents to buy private health coverage. 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.

Download the full analysis of the Massachusetts law, which provides an overview of the cost and status of the Massachusetts' mandatory purchase requirement, released today by the Foundation for Taxpayer and Consumer Rights (FTCR) at: http://www.consumerwatchdog.org/resources/masshealth.pdf

A proposal modeled on the Massachusetts law announced on Wednesday by Governor Schwarzenegger fails to account for the affordability crisis faced by Massachusetts residents. In fact, a provision of Schwarzenegger'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. With no tested regulatory review of where the money is going and whether rate increases are necessary, the cap will encourage insurers to give hospitals and doctors whatever they ask for -- at the expense of individuals and the state.

"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.

Under the new Massachusetts law, by April 15, 2008, -- tax day -- residents must prove on their tax returns that they have private health insurance or face financial penalties.

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,
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SOURCE Foundation for Taxpayer and Consumer Rights
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