Consumer Watchdog Campaign: California Medical Industry Gave $110 Million On Initiative Campaigns This Election Cycle – Half Of The $223M Spent On Initiatives Over The Previous Decade

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SANTA MONICA, CA – The California medical insurance industry has committed $110 million to three November 2014 ballot initiative campaigns, half of the amount it gave to ballot initiatives during the entire previous decade and over one-third of the industry’s total political giving on California campaigns. The initiative contributions oppose initiatives to regulate health insurance premiums and hold the medical industry accountable for harming patients, and support a measure to guarantee hospitals $3 billion in federal Medi-Cal funds.

View the National Institute On Money In State Politics graphic (click on it to make it larger):


Campaign reports will be filed today with the Secretary of State updating contribution numbers for the first quarter of 2014, however the $110 million represents the majority of the medical industry's contributions to date, because any contribution over $5,000 must be reported within 10 days or less.

This election cycle, the medical insurance industry has given:

•    $25.4 million to the campaign against a consumer protection ballot measure that will prevent overcharges and misuse of health insurance premium dollars (
•    $34 million to fight the patient protection measure known as the Pack Patient Safety Act, which will mandate drug testing of doctors, curb doctor-shopping drug abusers and adjust the state's malpractice cap to account for 38 years of inflation (
•    $51 million to back an initiative to seize control of $3 billion per year of federal healthcare dollars, which was referred to by Hospital Association CEO Duane Dauner in a secret memo as “an ironclad protection” that “gives permanent protection” to hospitals’ federal funds

According to a graphic recently released by the nonpartisan National Institute on Money in State Politics, the medical insurance industry in California contributed $315 million to California campaigns during the prior decade, 2002 to 2012, including:

•    $223 million to ballot measures
•    $71 million to candidates, and
•    $21 million to state parties

“The medical industry has already given half as much money to ballot measure campaigns since January of last year as it spent on ballot initiatives during the entire previous decade. These staggering sums guarantee that the fight to pass 2014’s consumer and patient protection initiatives measures will be one for the record books,” said Carmen Balber with Consumer Watchdog Campaign, which is campaigning for the rate regulation and patient safety measures “2014 is truly the ‘Year of the Patient’ or the medical insurance industry wouldn’t be spending so much, so early, against consumer and patient advocates. Fortunately, California voters have a track record of seeing through millions spent by insurers to deceive voters at the ballot. “

In 2010 and 2012, Mercury Insurance and its CEO George Joseph spent $34 million on two ballot measures to raise auto insurance prices on some drivers. Both initiatives were defeated. In 1988, voters passed Proposition 103 – a measure to regulate auto, home and business insurance premiums that would be extended to health insurers at this election – despite the record $60 million spent by the insurance industry to defeat it.

The top donor to ballot measures from 2002-2012 was the California Association of Hospitals & Health Systems, which funneled $14.5 million into ballot measure campaigns. The California Medical Association led giving to candidates, at $3.99 million, while the California Dental Association gave the most to parties at $3.97 million.

“The irony,” said Balber, “is that the medical industry is spending unprecedented amounts of patients’ dollars against life-saving and money-saving reforms, while arguing those reforms will raise health care costs. The ballot measure to regulate health insurance rates will prevent insurance companies from passing on this kind of political spending to consumers.”

This spending to influence voters on the November 2014 ballot is still a fraction of the billions of dollars in reserves the health insurance industry is sitting on. For example:

•    Blue Shield of California has net worth of $4.1 billion and has a surplus of about $3.68 billion—an amount that is 1,667% more than the State requires. In October 2013, the California Department of Insurance found Blue Shield’s administrative costs to be “excessive and significantly higher than the allocations of the other major health insurance carriers.”

The Insurance Rate Public Justification And Accountability Act on California's November 2014 ballot will:

•    Require health insurance companies to publicly disclose and justify, under penalty of perjury, proposed rate changes before they take effect.
•    Make every document filed by an insurance company to justify a rate increase a public record.
•    Require public hearings on proposed rate increases.
•    Give Californians the right to challenge excessive and unfair premium rate increases.
•    Prohibit health, auto and home insurers from considering Californians' credit history or prior insurance coverage when setting premiums or deciding whether to offer coverage.
•    Give the insurance commissioner authority to reject unjustified rate increases.
•    Allow the insurance commissioner to order rebates for consumers and businesses that are paying excessive rates.

The Troy and Alana Pack Patient Safety Act will:

•    Prevent physician substance abuse by requiring random alcohol and drug testing of doctors, the same as required of police, airline pilots and bus drivers
•    Require that physicians use the state's existing prescription drug database to curb doctor-shopping drug abusers.
•    Promote justice for patients by adjusting the state's malpractice cap to account for 38 years of inflation.

According to an analysis by the California Legislative Analyst’s Office, the medical industry’s Medi-Cal Funding and Accountability Act of 2014 amends the State Constitution to limit the Legislature’s ability to impose fees on hospitals and requires that the money from the fees and the $3 billion (per the initiative sponsors) in federal matching funds from those fees be dedicated to hospitals. It also requires the state to maintain “existing funding” from state General Fund, federal funds, and certain state special funds on Medi-Cal hospital services, estimated to be 
$8 billion in the 2012-13 state fiscal year.

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Jamie Court
Jamie Court
Consumer Watchdog's President and Chairman of the Board is an award-winning and nationally recognized consumer advocate. The author of three books, he has led dozens of campaigns to reform insurance companies, financial institutions, energy companies, political accountability and health care companies.

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