Perata Roadblock to CA Mandate Weakens After SEIU Contributes $450K to Prop 93

Santa Monica, CA — Penalties must be “mean” or people will not be compelled to buy health insurance under the Massachusetts mandatory purchase law, according to a proponent of the law who also did the financial projections for a similar plan pending in California.

As reported in the Boston Globe, Jonathan Gruber, a member of the Massachusetts board responsible for implementing the plan, said, “The mandate has to be enforced… We need to think beyond what looks mean and do what’s right.”

“If the state has to be ‘mean’ by requiring steep punitive fines to get people to buy unaffordable health insurance, the mandatory purchase regime isn’t working,” said Carmen Balber with the nonprofit Foundation for Taxpayer and Consumer Rights (FTCR). “When premiums, co-pays and deductibles quickly add up to 10% and more of a family’s income, it’s no wonder Massachusetts consumers are choosing not to buy high cost private insurance.”

Gruber argued that proposed penalties, as high as $912 per person, per year, are not large enough to force individuals to buy insurance rather than pay the penalty under Massachusetts’ mandatory purchase law.

Signs are that California Senate resistance to a similar health plan is crumbling. Commentators reported that California Senate Leader Don Perata made comments yesterday that suggested he expected the bill to clear his house. The comments came after the legislation’s leading proponent, the Service Employees International Union, made $450,000 in contributions this week to a campaign committee supporting Proposition 93, the measure that would extend the terms of legislative incumbents including Senator Perata. The committee has ties to the Senate leader.

FTCR sent a letter to the Senate Health committee yesterday pointing out the extensive failures in Massachusetts and costs of such a plan for California.
Click here to download a copy of the letter.

California’s bill proposes assigning patients who don’t buy insurance to a plan, then collecting payment from them later, but does not detail the enforcement mechanism.

“Governor Schwarzenegger and Speaker Núñez are trying to pretend we won’t be faced with the same decision they’re making in Massachusetts: enact penalties that are harsh enough to force people to buy health insurance they can’t afford, or admit that a mandate does not mean universal health coverage. California politicians are denying the ugly reality of the mandate until after the votes are cast,” said Jerry Flanagan with FTCR.

Massachusetts has already exempted almost 20% of uninsured adults who don’t qualify for subsidies because the mandated insurance is too expensive, and health plans are unaffordable for many who are not exempted. For example, a 55-year-old in Boston would pay $4,510 in premiums per year, and a $2,000 deductible, or 13% of a $50,000 income.

The Massachusetts law also faces an affordability crisis, with costs projected to increase up to 14% next year, employers paying a fraction of the amount expected, and expenditures for state-subsidized care 30% higher than projected.

Read the Boston Globe story here.

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FTCR is California’s leading public interest watchdog. For more information, visit us on the web at www.ConsumerWatchdog.org.