Consumer advocates said today that California should set a national example by regulating health insurance overhead costs as insurance company profits continue to see double digit increases. The Foundation for Taxpayer and Consumer Rights (FTCR) cited data released today showing that HMO profits increased 10.7 percent in 2004 after an 80 percent increase in 2003, a trend that will likely continue as HMO mergers reduce market competition and patient choice.
“Including profits, CEO salaries and administration costs, more than 25 percent of every health care dollar we spend goes to HMO overhead. As a result, patients and small business owners pay more for less care. The last decade of HMO mergers has taught us that when fewer HMOs dominate the health care market, quality goes down, premiums go up, and patients get short changed,” said Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights. “Health care should no longer be treated like a second-class citizen. California drivers have saved over $23 billion dollars as a result of voter approved Prop 103 which requires insurers to justify overhead costs before raising rates. Rules that govern auto and home insurance must be applied to health care. Without oversight, more and more California families will no longer be able to afford their health insurance.”
FTCR kicks off a new Internet campaign with a very funny animation entitled “Pig People from Outer Space (PPOs)”, and a petition “giving consumers a chance to fight back against outrageous CEO salaries and to call on regulators to crack down on profiteering by regulating health insurance premiums in the same manner as auto and home insurance premiums under Prop 103.”