Consumers enduring double-digit health insurance increases joined Assemblyman Dave Jones (D-Sacramento) and consumer advocates today to support Jones’ legislation requiring HMOs and health insurers to justify their rates and get approval for increases.
Jones’ measure is especially important in light of proposals by Gov. Arnold Schwarzenegger and Senator Don Perata (D-Oakland) that would require all Californians to buy health insurance but allow insurers to charge whatever they choose.
The legislation is similar to requirements in the auto insurance market that have saved drivers $23 billion since 1988. The measure would control the type of administrative waste and profiteering that allowed Blue Cross of California to keep, as overhead and profit, 50% of every premium dollar collected from individual policyholders.
“Our premium has shot up 43% since 2003, and the out of pocket maximum went from $3,000 to $5,000,” said Sharon Fowler of San Diego. My husband will go on Medicare this year and my coverage alone will cost $415 in January — another 14% increase. Who knows how many rate increases I’ll get next year. It’s funny that you have to wish you were older to get some health insurance relief through Medicare.”
Laurel Kaufer, a self-employed single mother of two teen-aged boys, has struggled to balance health care costs with the need to seek care. Kaufer’s current plan with Blue Cross has a $3,000 family deductible and $12,000 out of pocket family maximum, and a minimum of a 30% co-pay. The premium for this bare-bones plan is $671 a month, up 30% in just 18 months.
“No one should be put in the position of having to consider these factors when faced with a potential emergency or oncoming illness, doing a juggling act with their or their children’s health, yet that seems to be exactly what insurance companies want us to do, all for the sake of their bottom line,? said Kaufer.
Just five California HMOs (Kaiser, Blue Shield, Blue Cross, PacifiCare, and HealthNet) have recorded profit increases of $11.7 billion since 2002. 4 of the companies transferred $3.2 billion in profit to out-of-state parent companies since 2002. The 6 largest HMOs spent $1.6 billion in marketing in 2006.
The proposed legislation, AB 1554, would require insurers to justify overhead costs and excessive profits before raising rates. Proposed rate increases would be denied if they were deemed excessive or unfair. Rates would not be set by the state, but the transparent process of public review would assure that increases are justified.
“This bill should be passed before the Legislature even contemplates requiring all Californians to buy health insurance,” said Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights (FTCR). “While HMOs and health insurers have racked up record profits and wasted billions on overhead, millions of Californians have been forced into bare-bones coverage that offers little protection when they get sick, or have dropped coverage altogether.”