Consumer Group Challenges Gov to Make Health Care Affordable By Limiting HMO & Drug Co. Profiteering in Reform Plan

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Santa Monica, CA — In a letter sent today, the Foundation for Taxpayer and Consumer Rights challenged Governor Schwarzenegger to curb excessive profiteering and waste by HMOs and drug companies as a way to make health care more affordable and accessible. The letter follows the governor’s statement on “Meet the Press” Sunday: “First of all, we have to bring down health care costs. We have to make it more affordable to provide health care. Number two, we have to insure everybody.” 

While FTCR told Schwarzenegger that “we will stand with you in the task,” FTCR said the governor would have to overcome the opposition of the health insurance complex that has contributed more than $4 million to his political campaigns and has shaped Schwarzengger’s policy stands in the past.  

FTCR suggested a five point plan to remove health care industry waste and inefficiency, the cornerstone of affordability and increased access to care:

* mandatory oversight of health insurance premiums similar to systems in place for auto insurance under Proposition 103
* prescription drug bulk purchasing
* preventive care
* protections against insurer price-gouging for so-called “pre-existing conditions”
* a ban on “bare bones” junk insurance that leaves patients unprotected when they get sick

Read the letter at:

In the letter FTCR wrote:

“If you truly want to keep health care costs down and make health care more affordable, you cannot ignore reform of the HMOs, insurers, and drug companies that have been among your most generous political supporters. These industries are the ones who have profited from the suffering of the underinsured and uninsured and can most afford to tighten their belts….

Your admirable goals are “Prevention, affordability and access to care.”  It will take true courage to stand up to the bullies and gluttons of the health care system and keep them from bending these goals to preserve their profits and inefficiency.”

To achieve real reform FTCR said Schwarzenegger would have to change his stance on waste and excessive profiteering by insurers and drug companies.  According to the Foundation for Taxpayer and Consumer Rights, the governor has “supported health insurers’ unfettered right to profits at the expense of patients. You have accepted the right of insurers and the health care industry to waste billions of dollars each year while California families struggle to keep up with cost increases.”

For example, the governor’s largest health care contributor — Blue Cross of California, its parent company WellPoint and its top executives — have given a total of $256,600 to the governor.  Blue Cross and others would continue to reap unnecessary overhead costs and outsized profit from a health care plan that fails to crack down on industry waste. 

New data released today by FTCR shows that Blue Cross of California has transferred $1.3 billion in profit out of state since 2002.  According to FTCR this is the same accounting sleight of hand that during the energy crisis allowed PG&E to claim poverty in order to get what it wanted out of Sacramento while bragging about record profits to Wall Street.

Schwarzenegger has indicated that he supports an “individual mandate” system similar to that in Massachusetts in which each individual is required to buy health insurance, without any protections against insurer waste and excessive profits, or face liens on the income taxes.  Such a system would be a disaster in California, FTCR said, because unlike Massachusetts, California is dominated by for-profit insurers and does not protect consumers from being hit with unaffordably higher premiums because of past medical conditions.

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The Foundation for Taxpayer and Consumer Rights (FTCR) is California’s leading public interest watchdog.  For more information, visit us on the web at:

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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