Insurance Regulation Will Lower Costs: Has Saved Calif. $23 Billion in Auto Insurance Rates
Santa Monica, CA — The board implementing Massachusetts’ mandatory health insurance law must direct the legislature to require HMOs and insurance companies to open their books and justify insurance prices, rather than further degrade standards for minimum insurance as they did today, said the non-profit Foundation for Taxpayer and Consumer Rights (FTCR).
“The product Massachusetts residents will be required to buy will soon be of little value as insurance. The board has acted as if the only other choice would be to keep merely decent coverage standards and waive the individual purchase mandate for the many who could not afford to buy such policies. There is, however, a third option: rein in the waste, inefficiency and excess of private health insurers and HMOs that make worthwhile health coverage unaffordable,” wrote Carmen Balber, consumer advocate with FTCR.
The model for insurance regulation in Massachusetts should be California’s successful insurance reform Proposition 103, which has saved auto policyholders $23 billion, not Massachusetts’ dysfunctional auto regulatory scheme.
The board today allowed health insurers to draft minimum plans that eliminate drug coverage and exclude more patient expenses from counting towards the already-high $5000 deductible.
State Senator Richard Moore and House Speaker Salvatore DiMasi acknowledged last week that regulation of the health insurance plans — or at least the threat of regulation — may be necessary to achieve Massachusetts’ goal of universal health care.
“The mere threat of regulation has not convinced the health plans to offer you an affordable premium for quality care. The Connector must urge lawmakers to begin drawing plans to regulate Massachusetts’ health care industry by requiring HMOs and insurers to open their books and justify rates,” continued FTCR.
The health plans’ response to the board’s previous set of standards for minimum coverage — which had already raised the family out-of-pocket maximum from previous recommendations — were unaffordable bids at an average $380 a month. Those policies would cost someone making $30,000 a year more than 15% of their income, before considering deductibles, co-pays and other uncovered expenses.
Massachusetts’ primarily not-for-profit health care system should make it easier for the state’s health plans to eliminate waste, administrative overhead and excessive salaries. Yet even in a non-profit, said FTCR, executive salaries are often questionable.
“The President/CEO of Tufts Associated HMO, a non-profit arm of Tufts Health Plan and your former employer, reported $900,007 in income and bonus in 2004. The Connector itself has been criticized for agency salaries that outstrip those of the Governor and his Cabinet. These costs are rolled into the insurance premium Massachusetts citizens will have to pay,” noted FTCR’s letter to Jon Kingsdale, executive director of the Connector Authority.
FTCR has called for state laws to limit bloated health industry overhead and profits by requiring a review of their finances and prior approval before they can raise rates. Such review is already required of auto insurers in California under voter-approved Proposition 103, and has saved motorists at least $23 billion since 1988, according to the Consumer Federation of America.
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FTCR is California’s leading public interest advocacy group. For more information visit us on the web at: http://www.ConsumerWatchdog.org.
