Nunez and Legislators Urged to Oppose Mandatory Purchase of Private Health...(cialimposition even as insurers have red...),Health

Date:9/26/2007

cial imposition, even as insurers have reduced coverage to tweak prices. Next April 15, Bay-staters must prove on their tax returns that they have purchased coverage. In the future, those who can't will pay a penalty of up to $2,000 and lose their personal tax exemptions. Under Governor Schwarzenegger's vision of the mandatory purchase of private insurance, those who cannot afford to buy would have their wages garnished.

A mandate's problems, in more detail:

1. At $12,000 a year for family coverage, mandatory purchase of private insurance is unaffordable -- particularly without regulation.

Cost of Coverage

Insurance premiums have increased 78% since 2001, compared to a 19% increase in wages and a 17% increase in inflation. A recent report showed that the average cost of coverage for a family of four is already more than $12,000 a year. That price is unaffordable for California families earning above the amount available for subsidies -- 300% of the federal poverty level ($62,000 for a family of four) in the current Nunez plan -- and costs will not decrease under a mandatory purchase requirement.

* Just five companies -- Blue Cross, Kaiser, Blue Shield, PacifiCare, and Health Net -- control 80% of California's health insurance market. That extreme consolidation has given the major companies a stranglehold over pricing, allowing them to raise rates to boost profits. A mandate would solidify their cartel-like pricing.

* A proposal to cap insurer overhead and profit at 15% is only half of the cost-control equation and, without rate regulation, may actually drive up premiums. 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. Doctors, hospitals and insurers will have common cause to raise rates at the expense of individuals and the state. Insurers would be encouraged to define as medical expenses what
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SOURCE Foundation for Taxpayer and Consumer Rights Copyright©2007 PR Newswire. All rights reserved

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