Yes on 45: Health Insurance Reform Prop 45 Facing the David v Goliath Battle of Its Predecessor

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Santa Monica, CA — Proposition 45, the health insurance reform initiative on the November ballot, is following the path taken by the 1988 insurance reform initiative on which it is based, Proposition 103.  The landmark insurance reform overcame $63 million in insurance industry spending and the opposition of the entire California political establishment to pass on November 4, 1988 – and went on to save California consumers and small businesses hundreds of billions of dollars on their auto, home and business insurance premiums.

A then-and-now comparison of the campaigns by Consumer Watchdog – whose leaders sponsored and campaigned for both measures –is illuminating.

• Insurance companies outspent each measure 30 to 1 and tried to hide their role as opponents by paid surrogates who participated in public debates.

• Many major newspaper editorial boards feared to rock the boat, claiming 103 was either “unnecessary” or “too tough” on insurers.

• As is the case today, the state bureaucrats who worked closely with insurance companies were opposed to 103. (Roxani Gillespie, appointed Commissioner by Gov. Deukmejian; Covered California Board Members Susan Kennedy, Kim Belshe and Diana Dooley, former appointees of Governors Davis, Schwarzenegger and Brown.)

•The early Fall polling is similar for both 45 and 103, as voters didn’t focus on their decision until the end of the campaign

• The insurance industry’s arguments against Prop 45 are nearly identical – sometimes word for word – to the phony arguments they made against Prop 103.
    •    “Will create a huge bureaucracy”…
    •    ”Insurance Czar”…
    •    “Will raise rates”…
    •    “Special interest influence”…

Proposition 103 required auto, home and small business insurance companies to open their books and justify their rates before they took effect; barred insurance companies from unlawful underwriting practices; repealed the industry’s exemption from the antitrust, civil rights and consumer protection laws; made the state’s insurance commissioner an elected post (it was then a gubernatorial appointment); and gave consumers the right to challenge unfair and excessive insurance rates. Proposition 45 extends these protections to the health insurance industry, which has jacked up premiums at the same

“It’s really amazing how similar the situation is now,” said Harvey Rosenfield, the author of Proposition 103 and the founder of Consumer Watchdog. “Back then, like today, the insurance industry had paid off every state or local official, campaign consultant and activist they could. Commentators bought the ‘sky is falling’ threats from the industry and its surrogates in government. Other players were more concerned about protecting their own turf and the status quo.

“But angry California voters ignored the politicians and pundits and passed Proposition 103. Their confidence has been amply rewarded. Proposition 103 has saved motorists over $100 billion since it took effect, according to a study by the Consumer Federation of America. California’s the only state in the nation where the average auto insurance bill is lower today than it was when 103 passed!

“Once California voters realize that Prop 45 will protect them and their families against outrageous rate hikes and other abuses, they will understand why the health insurance industry is spending tens of millions of dollars trying to defeat 45. Then the voters will take matters into their own hands and vote yes on Prop 45,” Rosenfield said.

Proposition 103 Endorsements

San Francisco Guardian
King City Rustler
Alpine Sun
Malibu Times
San Jose Metro News
Palo Alto Weekly
SLO Telegram

Sacramento Bee
San Francisco Chronicle
Los Angeles Times
San Francisco Examiner
Contra Costa Times
Modesto Bee
Fresno Bee
San Diego Union
San Diego Tribune
Eureka Times-Standard
Stockton Record
Ventura Star-Free Press
Santa Barbara News-Press
Los Angeles Daily News
Sacramento Union
Press Courier
Lompoc Record
Chino Champion
San Gabriel Valley Tribune
Chico Enterprise Record
Placerville Times
Watsonville Register
Stanford Daily
Fremont Argus
Simi Valley Enterprise
Hemet News

Insurance Industry Arguments Against Prop 103 and 45

  Then – Prop 103 Now – Prop 45
“Prop _ will raise rates” “This change in the law will…increase rates for 12 million drivers….” – flier circulated by the No on 103 committee. “The impact from my perspective could be really huge and very negative on our ability to function, and that inability to function will trickle down to the risk being padded into the rates on consumers.” – Susan Kennedy. From Sacramento Bee article, 6/9/14 “California health exchange wants to analyze rate initiative”
“Prop __ will raise taxes” “it inevitably would lead to a huge, state-run insurance system costing millions of dollars.” – Ballot Argument Against Proposition 103 “Increase state administrative costs tens of millions of dollars per year—costs ultimately paid by consumers.” – Ballot Argument against Proposition 45
“Prop __ will create a massive new state bureaucracy” “Create a huge government bureaucracy that does nothing to make auto insurance more affordable.” – Ballot Argument Against Proposition 103 “Costly, duplicative bureaucracy” – Ballot Rebuttal to argument in favor of Prop 45
“If Prop _ passes, insurance companies will stop selling insurance and leave California” “To bolster its claims, the insurance industry released a study claiming the passage of Proposition 103 would ‘wreak havoc’ on Californians because it would cause many Insurance companies to leave the state.” – San Francisco Chronicle article titled “Business Groups Warn of Prop. 103 ‘Havoc’” “Staying in this market would be risky, perhaps even foolhardy.” – Wakely report commissioned by No on 45 committee – May 2014.
“Prop _ will lead to frivolous lawsuits” “Written and sponsored by a Santa Monica lawyer,” –Henry Voss, President California Farm Bureau Federation on No on 45 mailer. "“HIDDEN AGENDA—COSTLY NEW LAWSUITS.” – Ballot Argument Against 45
“An independent study” says Prop _ is bad for consumers “Report” by appointed head of insurance department: “Rates will increase by an average 22% for two-thirds of the state’s drivers, according to the State Department of Insurance (report),” – Ballot Rebuttal to Argument in Favor of Proposition 103 – “Covered California issued a report finding that Prop. 45 would have “significant detrimental impacts” on its operations.” – SFGate, 9/19/14 article entitled: “Vote no on Prop. 45: Don’t disrupt Covered California’s success”
Politicizes the Insurance Commissioner's office” “As a politician, this official (Insurance Commissioner) would be preoccupied with raising campaign money from special interests all too willing to “buy” influence.” – Ballot Argument Against Proposition 103 “We shouldn’t allow a politician who can take campaign contributions from special interests to interfere with the commission’s work.” – Ballot Argument Against 45
“Creates an Insurance Czar” “Make the Insurance Commissioner an elected official with enormous new powers. This “Insurance czar” would be a politician fist, and a regulator second.” – Ballot Argument against Proposition 103 “Californians Against Higher Health Care Costs – is trying to chip away at that support, making a dueling set of arguments: To Republican voters, making the case that Prop. 45 empowers Jones as an unaccountable health care czar” – California Healthline article: “Californians Want It. Isnurers Don’t. So Why are Top Officials Fighting Over Prop. 45?”




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Paid for by Consumer Watchdog Campaign – Yes on 45, a coalition of consumer advocates, nurses, attorneys, and policyholders.  777 S. Figueroa St., Ste. 4050, Los Angeles, CA  90017.  Major Funding by Consumer Watchdog Campaign and California Nurses Association.

Harvey Rosenfield
Harvey Rosenfield
As Consumer Watchdog's founder, Harvey Rosenfield is one of the nation's foremost consumer advocates. Trained as a public interest lawyer, Rosenfield authored Proposition 103 and organized the campaign that led to its passage by California voters in 1988 despite over $80 million spent in opposition (still a record).

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