“Non-Profit” Kaiser is Poster Child for Health Insurance Rate Regulation

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Santa Monica, CA — Non-profit Kaiser Permanente, one of the state’s largest health insurers, reported today a $1.2 billion revenue increase and a “profit” of $698 million up from $448 million over last year. The Foundation for Taxpayer and Consumer Rights (FTCR) said that huge profit increases at a time when millions of Californians are struggling to afford health insurance makes the case for pending state legislation, AB 1554, which would require health insurers to justify and seek approval of their premium increases.

A similar requirement on auto insurance companies under Proposition 103 has saved California drivers at least $23 billion since 1988.

“At a time when people are being priced out of health insurance it’s outrageous that State Farm has to justify its auto premiums but health insurers are allowed to charge whatever they choose. Legislators must realize that regulation of premiums is essential when a so-called non-profit insurer reports a $700 million profit increase in just one quarter — enough money to provide health insurance to 230,000 Californians for an entire year,” said Jerry Flanagan of FTCR. “Premium increases for patients and business owners fuel huge profit increases and a lack of competition allows health insurers to charge more for less coverage. Consumers have no choice but to pay or go uninsured.”

AB 1554, by Assemblyman Dave Jones (D-Sacramento), would require health insurers to justify their rates and get approval for increases. Overhead costs — including advertising, administration, and CEO salaries — have become the fastest growing component of health care spending.

Kaiser reported revenue of $9.4 billion for the first quarter of 2007, up from $8.6 billion in the first quarter last year, and a profit of $698 million for the quarter up from $448 million. Because kaiser is a non-profit company, “profits” are retained in reserve accounts. Kaiser currently has $9.3 billion in excess reserves, an increase of $8.8 billion since 2002.

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FTCR is California’s leading public interest watchdog. 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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