Health Coverage Proposal By Hospitals, HMOs and Families USA Falls Short of Real Fix

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Limiting HMOs’ Overhead & Profits Vital To Cost Effective Universal Health Care System

The Foundation for Taxpayer and Consumer Rights (FTCR) said today that the health coverage expansion model expected to be announced today by the Health Insurance Association of America, Families USA and the American Hospital Association falls short of a systemic fix to the uninsured problem because it leaves in tact unreasonable insurance overhead and profit expenditures, as well as abusive industry practices.


The model supposedly provides states additional funds to broaden Medicaid eligibility; allows states to expand CHIP eligibility; and offers tax credits to employers who provide coverage, which could be used to cover part or all of the cost of premiums that are often too expensive for low-income workers. The participants believe half the uninsured currently will be covered by the plan.

“Keeping excessive HMO profits in the health care system means uninsured will continue to be kept out,” said Jamie Court, executive director of FTCR. “Giving insurers and HMOs control over health insurance coverage reform is like turning cancer research over to the tobacco industry. Insurers have realized that if they do not get on board with expanding health insurance coverage, then genuine universal health insurance initiatives will roll over them by redirecting the roughly twenty cents of every health premium dollar spent on HMO overhead and profit toward additional coverage. The proposed model does nothing to address HMO profiteering and protect the taxpayer and patient from insurer price gouging. It seems insurers will only sign onto expanding coverage if it leaves in tact their right to charge as much as they like and do whatever they want with premium dollars. HMOs would have been on board with a universal health coverage solutions decades ago if it simply meant more profits from more customers and did not include controlling unreasonable industry prices, expenditures and practices, such as cherry picking. This is not a long term solution, but a taxpayer-funded expansion of a failed and costly corporate medicine model.”

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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