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The 7 Key Questions About the Schwarzenegger/Nunez Health Care Compromise
Date:9/5/2007

urance and may not even be able to afford out-of-pocket costs.

Speaker Nunez's bill in its current form fails to ban such junk insurance policies, though Gov. Schwarzenegger has said he will prohibit such policies. Without caps on out of pocket costs, regulators do not have the tools they need to prevent cases like that of Marina Del Rey resident Dana Christensen, who unknowingly bought a junk policy and was left with $450,000 in medical bills when her husband, Doug, died of bone cancer. Your proposal should cap annual out-of-pocket costs, preferably at $3,000 for individuals and $5,000 for families.

2. Will you make the individual mandate contingent upon the passage of a

funding mechanism to pay for it?

We have read and heard that your compromise may sidestep a required 2/3 vote in the Legislature by separately asking voters to approve funding the measure through certain fees and taxes.

Your proposal must at least be written to withhold the individual mandate if the ballot measure establishing a funding mechanism fails.

3. What is your method for cost control?

Without effective regulatory limits and oversight, taxpayer subsidies will be wasted on insurer profit schemes and related medical inefficiencies.

You both have proposed capping insurer overhead and profit at 15%. But this is unlikely, on its own, to lead to lower costs because it provides an incentive for insurers to pay hospitals and doctors whatever they ask rather than encourage medical efficiency. Insurers, who will keep 15% of premiums no matter what they pay doctors and hospitals, would benefit from medical duplication of services and other deliberate inefficiencies.

In addition, unless there are strict definitions of which insurer payments are administrative and which are medical, extensive cost-shifting to the "medical" column is likely.

4. How will you prevent employers from dropping more expansive coverage

and placing larger burdens
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SOURCE Foundation for Taxpayer and Consumer Rights
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