Health Affordability Talk, But No Regulatory Walk In Wake of $1 Million Dollars in Industry Contributions To Committee Members;

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Senator Kuehl Called On To Introduce Insurance Premium Regulation

Santa Monica, CA — At a state Senate hearing today addressing Governor Schwarzenegger’s plan to require all Californians to buy health insurance, administration representatives refused to give a dollar amount for how much health policies would cost under the proposal and rebuffed questions about the need for regulation of insurance premiums to make them affordable for people who would be required to buy coverage.

Committee chair Senator Sheila Kuehl raised the issue of regulating health insurance in the same manner that auto insurance is regulated under Prop 103. The Foundation for Taxpayer and Consumer Rights (FTCR) urged her to author a bill providing such regulatory oversight though she recently declined to do so. No senator FTCR has approached has been willing to author health insurance rate regulation. (Senator Kuehl was the only committee member who did not rake in significant contributions from the medical-insurance complex).

“If legislators want to make health care affordable they should look to Prop 103 — which has saved drivers $23 billion since 1988 — unless the $1 million in campaign contributions has kept affordability off the table,” said Jerry Flanagan of FTCR. “Though politicians intend to require individuals to buy health insurance, no legislator has yet championed the issue of regulating insurance rates, or requiring insurers, doctors and hospitals to make public — and defend in public — the rates they charge.”

In lieu of regulating what insurers can charge, gubernatorial representatives called for cutbacks on health insurance coverage and high out-of-pocket costs for consumers.

“At the hearing, the governor’s staff repeatedly said they have faith in the market to keep premium costs down,” said Judy Dugan, research director for FTCR. “That is exactly what the oil industry told us about gasoline prices even as Californians paid pump prices of $3.38 per gallon last spring.”

The 11 members of the Senate Health Committee have received $998,978 in campaign contributions from health insurers, doctors, hospitals, and drug companies since 2005. FTCR said that the huge contributions have silenced the affordability debate.

Health care corporations and providers have the most to gain from a plan that requires Californians to buy insurance but allows insurers and HMOs to charge whatever they choose. Under the plan proposed by the governor, a family of four with income of $60,000 would be required to pay full price for coverage — averaging $11,500 per year (20% of their income) for premiums alone — or face tax penalties.

The governor’s proposal to require that 85% of health insurance premium revenue go to health care has to be paired with regulatory review of proposed rate increases in order to ensure that policies are affordable. Otherwise the 85% limit will perversely encourage insurance companies and HMOs to overpay doctors and hospitals so insurers can reap more revenue. For example, keeping 15% of a $15,000 premium will make more fiscal sense to insurers than 15% of a $10,000 premium.

FTCR said the Senate and Assembly health committees are seen as big opportunities for fundraising that leave members with big obligations to their political sponsors. The top cash getters, Democrats Leland Yee (San Francisco) and Gloria McLeod (Chino) and Republican Samuel Aanestad (Grass Valley) each received significant contributions from health insurers, hospitals, doctors and drug manufacturers.

Negrete McLeod, who received $36,000 from insurers and HMOs, was one of four Democrats to vote against a bill last year, heavily opposed by health insurers, that would have capped the amount of money that patients pay out of pocket when they get sick (AB 2281). As an assembly member, Negrete-McLeod also refused to cast a vote on a bill that would have reformed the anti-consumer health insurance mandatory arbitration system. That bill died in committee.

Yee, who received two dozen contributions from acupuncturists and acupuncture clinics, authored a bill last year that would have barred acupuncturist assistants from performing acupuncture. The bill was vetoed by Governor Schwarzenegger.

Total Contributions by Industry:

– HMOs, health insurers and underwriters have contributed: $188,539
– Pharmaceutical companies have contributed: $181,012
– Doctor, dentist and practitioner lobbying groups: $496,477
– Hospitals & clinics: $132,949

Contributions by Senator:

Sheila Kuehl, Chair (D): $6,950 –
– Samuel Aanestad, Vice Chair (R): $106,550 –
– Elaine Alquist (D): $52,884 –
– Gilbert Cedillo (D): $44,499 –
– Dave Cox (R): $70,001 –
– Abel Maldonado (R): $61,950 –
– Gloria Negrete McLeod (D): $194,405 –
– Mark Ridley-Thomas (D): $70,700 –
– Darrell Steinberg (D): $88,899 –

– Mark Wyland (R): $80,850 –
– Leland Yee (D): $221,289 –

– 30 –

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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