Medical Costs See Biggest Increase in More Than 15 Years As Policymakers Consider Requiring Californians to Buy Health Insurance

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Santa Monica, CA — A day after the second of two California legislative hearings on competing proposals requiring all individuals to buy health insurance, the U.S. Labor Department today announced that in January medical costs increased more than they had in 15 years. An article published today by the journal “Health Affairs” shows that the government spending accounts for 45% of total U.S. health care spending and will approach 50% within 10 years.

The Foundation for Taxpayer and Consumer Rights (FTCR) said the data is yet more proof that Governor Schwarzenegger and legislative leaders proposing the mandatory-purchase plans must include provisions to keep rates affordable by regulating insurance premiums, physician charges and hospitals costs.

“It’s ludicrous to require people to buy health insurance while costs are increasing at a record pace and Wall Street is cheering insurer and drug company profits. Imagine a law that required all Californians to buy a new car each year but allowed auto makers to charge whatever they choose. That’s the kind of universal profit protection scheme that insurers, doctors and hospitals can all get excited about,” said Jerry Flanagan health care policy director for the Foundation for Taxpayer and Consumer Rights (FTCR). “Taxpayers are already paying for nearly half the cost of health care and now government must regulate the price to make sure we get what we’re paying for.”

According to the Department of Labor, medical costs increased .8% in January, the largest one month increase in 15 years. The increase was driven by higher physician and prescription drug costs which in January increased faster than they have in 25 years.

FTCR has recommended Proposition 103 style regulation of doctors, hospitals, insurers and HMOs, which currently applies to auto insurers and other property/casualty insurance companies in California. Under that regulatory system, insurers must seek approval for rate increases and justify overhead and insurance costs.

Proposition 103 has saved California drivers more than $23 billion since 1988. In just the last four years, FTCR’s Prop 103 rate challenges at the Department of Insurance have resulted in $800 million in savings in auto, homeowners and medical malpractice insurance premiums.

Click here to view a chart of recent savings under Prop 103.

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The Foundation for Taxpayer and Consumer Rights (FTCR) is the state’s leading consumer watchdog group. For more information, visit us on the web at:

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