Governor Davis Has Been MIA on Controlling Health Care Costs; Today’s State of the State Address Is An Important Test of Leadership

A report released today by the U.S. government showed that health care spending increase by $100 billion in 2001, a 8.7% increases in total spending, according to the Foundation for Taxpayer and Consumer Rights. However, California HMOs have increased 2003 premiums to consumers and employers by 20-100% over 2002 levels.

“Governor Davis has been MIA on controlling health care costs. A failure to announce aggressive strategies to protect state consumers and employers in his State of the State address amounts to medical malpractice,” said Jerry Flanagan, health care advocate for the Foundation for Taxpayer and Consumer Rights (FTCR).

Health care advocates called on the Governor Davis and the state legislature to investigate HMO premium increases which have dramatically outpaced actual health care cost increases. Milliman USA, a leading business consulting company, recently completed its annual survey on employer health-care costs, estimating that HMO costs will rise approximately 20% in 2003. (October 23, 2002, Business Week, “Health-Care Costs: The Painful Truth”). Small employers and consumers with individual insurance policies can expect 30-100% increases for premiums, co-payments and deductibles. The report released today by the Centers for Medicare and Medicaid Services found that the 8.7% increase meant health care expenditures totaled 14.1 percent of the Gross Domestic Product (GDP) in 2001.

“Health insurers are reaping record profits by increasing premiums to consumers up to 10 times the actual rise in health care costs,” continued Flanagan. “California regulators must be given the authority to investigate rampant profiteering by HMOs.”

FTCR recently announced plans to explore new state legislation that would require health insurers to get a ‘prior approval‘ of proposed rate increases from state regulators. A similar system in the California’s auto insurance market, approved by voters in 1988, has set a national precedent for accountability and consumer protection.