6. Rate regulation, not the mandatory purchase of private insurance, is the first step to major reform.
Rate Regulation's Proven Record
A robust regulatory review would follow the health care money trail, oversee what insurers define as "medical spending" and ensure that premiums are not excessive. Since 1988, property and casualty insurance rate regulation under Proposition 103 has saved California drivers $23 billion in premiums. Our consumer group alone has saved Californians $800 million in auto, home, and medical malpractice insurance premiums by intervening against excessive rate increase proposals under Prop 103. According to a report released this year:
* California auto insurance premiums have declined by 7% since voters approved Prop 103 in 1988, while rates nationally have increased 47%.
* In the fifteen years following the passage of Prop. 103, California fell from 2nd most expensive state for auto liability premiums in the country to 21st.
* At the same time, the stability of rate regulation has provided above- average profits for California insurers.
Health Insurer Waste & Profiteering
Regulation of rates would squeeze billions of dollars of fat out of the health care system, leading to level or reduced rates even if guaranteed issue and community rating are required:
* Just four HMOs regulated by the Department of Managed Health Care (DMHC) have transferred $4 billion in profit to out-of-state parent companies since 2002 -- enough money to provide full coverage to 1 million Californians for an entire year.
* Just three companies, including Blue Cross and the non-profits Kaiser and Blue Shield, have $14.4 billion in excess reserves -- enough money to provide full coverage to 4.6 million Californians for an entire year. Kaiser has 1,200% of the required minimum, for a total of $11.3 billion in premium- funded excess reserves.
* Since the company's merger with out-of-st
|SOURCE Foundation for Taxpayer and Consumer Rights|
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