SANTA MONICA, Calif., Aug. 4 -- Consumer Watchdog issued the following news release:
Six health insurance companies financing the No on Proposition 45 committee have donated $37.3 million through June 30, 2014 against the ballot measure to regulate health insurance rates in California, according to campaign finance reports filed recently with the Secretary of State. This is more than three times the $12 million refund returned to Californians for 2013 under a federal Affordable Care Act rule requiring 80% of premiums to be spend on medical care.
Proposition 45 requires health insurance companies to get permission before raising rates, as is the rule in 35 other states. No federal or California agency has the power to reject unreasonable rate hikes today. Prop 45 also gives the insurance commissioner the right to prevent health insurance companies from passing on lobbying costs, civil fines, bad faith judgments, campaign contributions, or excessive executive compensation, as is the rule for other insurance companies in the states.
"Ironically Proposition 45 prevents policyholders from paying higher premiums to subsidize political activities such as the $37 million health insurance companies will spend on deceptive radio and television ads to defeat Prop 45, which will no doubt keep insurance companies' financing of the campaign in the shadows," said Jamie Court, President of Consumer Watchdog and proponent of the initiative. "Policyholders should not be billed for political campaigns that will allow health insurance companies to continue to raise rates without scrutiny or asking permission."
The No on 45 campaign has hired consultant Rick Claussen, creator of the infamous 1994 "Harry and Louise" advertising campaign against federal health care reform, to produce its $37 million advertising campaign, which is set to begin as early as mid August according to media buyers.
"Health insurers failed to dedicate adequate resources to health care and had to refund $12 million to consumers. Now they are spending three times that amount to defeat Proposition 45 which will force them to dedicate premium dollars to patient care," said Rob Leonard of Consumer Watchdog. "$37 million collected from sky high rates should be used to provide health care at reasonable costs, not to stop an initiative that will protect consumers from health insurer abuses."
The three health insurance companies controlling 75% of the private insurance market in California were the top contributors to the campaign to stop health insurance rate regulation. Kaiser gave $14.3 million, WellPoint $12.5 million and Blue Shield gave $9.5 million.
The $12 million refund Californians are receiving pales in comparison to the vast wealth and profits these companies generate. Kaiser, which controls 40% of the private insurance market in California had a total net income of $1.1 billion in the first quarter of 2014 and has an excess reserve of $12.7 billion. WellPoint just reported second quarter 2014 earnings of $731 million, and Blue Shield's profits were $171 million in 2013. Anthem Blue Cross controls 20% of the California market and Blue Shield controls 15%.
Proposition 45 will:
* Require health insurance companies to publicly disclose and justify, under penalty of perjury, proposed rate changes before they take effect.
* Require public hearings on proposed rate increases.
* Give Californians the right to challenge excessive and unfair premium rate increases.
* Give the insurance commissioner authority to reject unjustified rate increases.
* Extend its protections against rate hikes to 6 million individuals and small business owners, including the 1.4 million Covered California enrollees.
Consumer Watchdog campaign noted that policyholders should be wary of the good but unusual news of moderate average premium increases for 2015, which mask steep rate hikes for many. Last week's announcement included rate hikes of up to 16% for some Los Angeles area customers of WellPoint's Anthem Blue Cross. Anthem's rate increases were far above average in other areas as well, including hikes of 10 - 13% in Marin, 15 - 19% in Sacramento, and 10 - 14% in San Francisco. Health care premiums shot up 185% from 2002 to 2012 in California and are projected by the U.S. Congressional Budget Office to rise an average of 6% nationally from 2016 to 2024. Without Proposition 45 on the ballot in November, it's very likely premium increases in California for 2015 would have been higher, Consumer Watchdog campaign noted.
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