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Nunez and Legislators Urged to Oppose Mandatory Purchase of Private Health Insurance

Friday, October 5, 2007 General News
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SANTA MONICA, Calif., Sept. 26 In a letter senttoday to California Assembly Speaker Fabian Nunez and key legislators, theFoundation for Taxpayer and Consumer Rights (FTCR) urged their opposition toany health care reform compromise that includes mandatory purchase of privatehealth insurance.
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Gov. Arnold Schwarzenegger and Assembly Speaker Fabian Nunez are rumoredto be close to a deal on health care reform that will require everyCalifornian to prove they have a private health insurance policy -- but doesnot cap how much insurers can charge for it.
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The letter is available below and for download at:http://www.consumerwatchdog.org/resources/LtrCALegOpposeMandatoryHealthIns.pdf

In the letter FTCR wrote:

"A mandatory purchase regime, particularly one without vigorous costcontrols and premium regulation, amounts only to a customer delivery systemfor the fragmented, wasteful private insurance market. It will not solveCalifornia's health care problems and will only encourage the industry todemand more money in taxpayer subsidies and premium costs while providing lesshealth care.

"There is a big difference between mandatory participation in a cost-effective government program that protects us all (like Medicare) and beingforced to buy an unregulated private product. A mandate may get us closer touniversal insurance coverage, but we'll still be far from achieving universalhealth care. Why? Because the requirement will likely be for "affordable,"bare-bones policies -- the kind that come with $5,000 deductibles, big co-paysand holes in coverage and benefits.

...

"Whether [taxpayer] subsidies are provided to those earning 300% or even450% of the federal poverty level, throwing money at insurers will onlyencourage them to demand more money and provide less coverage."

Read Jamie Court's Los Angeles Times Op-Ed critiquing the mandate proposalat: http://www.consumerwatchdog.org/healthcare/co/?postId=8587

In the letter FTCR raised the following 6 point critique with themandatory purchase scheme:

1. At $12,000 a year for family coverage, mandatory purchase of privateinsurance is unaffordable -- particularly without regulation.

2. Mandatory purchase of private insurance will lead to more high-deductible, bare-bones policies.

3. Taxpayer subsidies without price caps will feed insurers' profitdemands and overhead.

4. Those who need coverage the most would face an uncertain future.

5. Mandatory purchase of private insurance will uninsure some of those whocurrently have coverage.

6. Rate regulation, not the mandatory purchase of private insurance, isthe first step to major reform.

We are writing to urge you to oppose mandatory purchase of privateinsurance as part of the legislative compromise on health care. ForcingCalifornians to buy private health insurance is unacceptable.

A mandatory purchase regime, particularly one without vigorous costcontrols and premium regulation, amounts only to a customer delivery systemfor the fragmented, wasteful private insurance market. It will not solveCalifornia's health care problems and will only encourage the industry todemand more money in taxpayer subsidies and premium costs while providing lesshealth care.

Proponents of mandatory purchase, a plan first conceived of by healthinsurance companies, say you cannot force insurers to sell policies toeveryone if Californians are not required to buy them. The truth is thatpeople want to buy health insurance. Sick and well would join the new marketif the product was affordable and those with trivial medical conditions werenot excluded.

Small employer groups of two or more have to be sold a policy today,regardless of employees' health condition. There is no gaming by employersand groups. The 7 million uninsured are largely well, working f
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