Mandatory Purchase Deal Is Giveaway to Big Health Insurers & Unfair Burden on Middle Class Without Premium Regulation;

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Health Insurers, Which Have Donated Millions to Lawmakers, Would Gain Big Profits Under Democrats Reported Proposal

Santa Monica, CA — A family of four earning more than $62,000 a year would be forced to purchase a private health insurance policy that is not subject to premium regulation, under a proposal by Assembly Speaker Fabian Nuñez, the Associated Press is reporting. A recent Kaiser Family Foundation Report showed that the average cost of coverage for a family of four is already more than $12,000 a year.

The plan would create an outrageous burden on California families that could only be explained by the insurers’ patronage of politicians’ campaign committees and the term limits extension initiative, said the Foundation for Taxpayer and Consumer Rights (FTCR). The nonpartisan, nonprofit group said that lawmakers should make the healthcare system fairer without the punitive imposition of mandatory purchase of private insurance.

Health insurers have contributed $2.3 million to California lawmakers since 2001 and an additional 1 million to the Democratic and Republican parties. Speaker Núñez has taken $136,300 from health insurers, more than any other legislator.

“Legislation that forces families making a little over $62,000 to spend twelve grand to buy private insurance without regulation of what insurers can charge is a giveaway to insurers and an unfair burden on California families that will result in a political revolt against the Legislature,” said FTCR’s President Jamie Court. “The Speaker and other politicians supporting this plan have proved that they don’t have a clue about the delicate family economics of the middle class. Forcing people to purchase private insurance will be referendum bait and a permanent stain on these politicians’ careers.”

Proposal Fails To Recognize Massachusetts Affordability Crisis

The proposal, modeled on a Massachusetts law, fails to acknowledge the affordability crisis already faced in that state. Coverage in Massachusetts is already much more expensive than promised and insurers, whose premiums are not capped or regulated, have indicated rates will increase again next year.

Massachusetts assumes that insurance is “affordable” if consumers can pay the premiums, disregarding deductibles, co-pays and other co-insurance. The cheapest mandatory plans offered come with $2,000 deductibles, co-pays of up to 35% for most health services, separate medication deductibles with up to 50% co-pays, and cap only some out-of-pocket costs. They would require each of the following to purchase insurance:

– A 55-year-old in Boston. Cost: $4510 premium/yr, 9% of a $50,000 income
– A small-town couple in their late-forties. Cost: $9,121 premium/yr, 11.4% of an $80,000 income
– Parents in their mid-fifties with two kids in rural Greenfield. Cost: $13,752 premium/yr, 12 % of $110,000 income

Few middle-income Massachusetts consumers have enrolled in the new mandatory coverage. Only 6% of new enrollees are buying private plans with no subsidy. Most of the remaining 94% of new enrollees are under 150% of the federal poverty level and receiving full subsidies.

Massachusetts also faces a simpler problem than California does. The state has 500,000 to 650,000 uninsured versus six to seven million in California. Unlike California, Massachusetts health insurers are primarily non-profit and the state had guaranteed issue and community rating before the mandate. Massachusetts’ median annual income is also $15,000 higher than California’s. Even so, it is not reaching the middle class.

“The Massachusetts experiment shows that mandatory purchase of health insurance just doesn’t add up, for families or taxpayers. If inefficient, high-overhead private insurers are allowed to charge whatever they choose, consumers pay more in the form of higher premiums and less coverage,” said Balber.

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The Foundation for Taxpayer and Consumer Rights is California’s leading non-profit and non-partisan consumer watchdog group. 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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