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Press Release
Jan 08, 2007 - 02:30 PM


CONTACT: Judy Dugan, 310-392-0522, ext. 305; or Jamie Court, ext. 327

Schwarzenegger Health Plan's Success Depends On Whether Average Californians Can Afford It;

Insurer Reforms Must Be Strengthened, Not Watered Down, Says Group
Santa Monica, CA -- The Foundation for Taxpayer and Consumer Rights (FTCR) said today that the outlines of Governor Schwarzenegger's health insurance reform plan address some of the most pernicious insurance industry practices but fail to guarantee that health insurance policies will be truly affordable and that the policies' benefits will be protective enough.

FTCR gave Schwarzenegger a thumbs-up for requiring insurers to sell all Californians health policies, to limit charges based on medical condition, to limit patient out-of-pocket maximums and to limit overhead and profits for insurers to 15%. However, Schwarzenegger would force every individual to buy insurance but the plan does not guarantee that premiums will be affordable for every Californian. Today, a health insurance policy costs over $11,000 for a family of four. Insurers will also be able to charge more based on health status.

"Governor Schwarzenegger recognized that insurers' failure to insure all patients is a big problem that needs to be solved, but he still must guarantee that insurance is both affordable and meaningful if he wants everyone to buy it," said FTCR president Jamie Court. "The gaping loophole in the Schwarzenegger plan is affordability. Insurers are allowed to raise premiums at will and there are no limits on how much doctors or hospitals can charge."

FTCR had recommended that health insurers be forced to justify their premiums to state regulators as auto insurers do, to prove they and their contractors are not profiting excessively. FTCR also expressed concerns that the current plan would be eroded in the legislative debate, with even fewer consumer protections.

Schwarzenegger did address the fact that insurers today refuse insurance to patients based on occupation, prescription drug use, and medical condition. Fixing this discrimination is an important step, but consumers must also be able to afford the coverage offered. See FTCR's earlier release on insurers' denial policies.

"Insurance companies and HMOs will do all they can to undermine the governor's healthcare plan, and fight to retain their right to make unlimited profit. Instead, the governors' proposals must be strengthened, not undermined, in the legislative process," said Jerry Flanagan research director of FTCR. "The governor's acknowledgment that insurers are abusing those who seek coverage does offer hope that this broken market will be fixed, regardless of the outcome of the debate on universal coverage."

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