The Good, the Bad, and the Ugly of the Núñez/Perata Health Plan

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Santa Monica, CA — The scant details of the health care compromise released today by California Assembly Speaker Fabian Núñez and Senate President pro Tem Don Perata provides some potential good news for low-income kids and their families but would guarantee a windfall for private health insurance companies out of the pockets of the middle class and taxpayers, according to the Foundation for Taxpayer and Consumer Rights (FTCR).

“The only good news in the plan is that it would insure kids and low-income families, while middle-income families will have to pay whatever insurers choose to charge or be left uninsured,” said Jerry Flanagan of FTCR. “The plan’s financing does not add up to affordability for the state, the health care system, or patients. Middle class families will either be priced out of coverage or forced to accept a bare-bones ‘junk insurance‘ policy. The legislature should focus on protecting kids this Thanksgiving and give up on the mandatory purchase plan that protects insurers at the expense of the middle class.”

The Good

– More kids insured with comprehensive benefits.
– Taxpayer subsidies to provide low-income parents access to same benefits through the state “Healthy Families” program.

The Bad

– Unlimited taxpayer subsidies for private insurers, via tax credits for families earning from 250-450% of the federal poverty level to allow them to purchase uncapped private insurance.
– An exemption from the mandatory purchase requirement for those whose insurance costs would exceed 6.5% of income is illusory; a state medical board can just accept steadily lower policy benefits to achieve “affordability.”
– The proposal fails to define a minimum acceptable health care benefit, even though individuals will be forced to buy such policies.
– Middle class families unable to afford an average policy, currently over $12,000 a year, would either be forced into cheap “junk insurance” that protects only insurance companies, or remain uninsured.

The Ugly

– Those who fail to pay for coverage will have their wages garnished.
– Nothing in the plan limits what insurers can charge in monthly premiums.
– The maximum 6.5% of payroll costs that employers must pay for employee health care is lower than the current workforce average, meaning that more of the cost will be borne by workers.
– There is no mention of “community rating” in the plan. Community rating, in effect in some form in 17 states, can prohibit the use of health status, age, gender and industry to calculate insurance premiums.
– As in Massachusetts, the plan is not universal. Large numbers of middle-class Californians are likely to be priced out of coverage.

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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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