Consumer Alert: Health Insurance Company Funding Hidden In No On Prop 45 Advertising & Marketing Effort Statewide; Paid Hands Do Industry's Work, Says Consumer Watchdog Campaign

SANTA MONICA, Calif., Sept. 23, 2014 /PRNewswire-USNewswire/ -- Consumer Watchdog warned the public today that a $37.5 million television and radio advertising campaign attacking Proposition 45 is funded exclusively by health insurance companies who would have to rein in rates if Prop 45 passes. The industry funding is hidden in a deceptive advertising and a marketing campaign waged by surrogates who are paid by the health insurance companies or who have financial ties to it.

"Health insurance companies are hiding their bankrolling of the No On Prop 45 effort because they know that if the public finds out they are opposed voters will recognize that Prop 45 is there to stop rip-offs of policyholders," said Jamie Court, president of Consumer Watchdog, "State disclosure laws that require health insurance company funding to be revealed plainly are being thwarted by deceptive type-face for fine print disclosures in television advertising and misleading advertisements, neither of which mention the words 'health insurance company'."

Proposition 45 stops health insurance companies from charging excessive rates. In addition to misleading the public through its advertising, the health insurance companies have paid the following surrogates:

• The Californian Republican Party opposition to Prop 45 this weekend came just two weeks after a $15,000 "contribution" to the California Republican Party from the health insurance company's NO committee, deceptively called "Californians Against Higher Healthcare Costs" (CAHHC).  (The Democratic party has endorsed Prop 45.)
  
• Micah Weinberg, Senior Policy Advisor at the Bay Area Council, is a spokesperson and op-ed author for the health insurance company's No On 45 campaign, but doesn't identify his industry affiliation. Two of the Bay Area's council's largest members include Blue Shield of California and the Kaiser Foundation Health Plan, which have contributed $24 million to stop Prop 45.  At the end of October, former Kaiser CEO George Halverson is being honored at the Bay Area Council dinner and the company is sponsoring the dinner with a contribution that is $75,000 or more according to promotional materials.
  
• Paid Democratic party and trade union agents of the health insurance companies' campaign include PR flack Steven Maviglio, who received $40,000 from CAHHC to his consulting firm Forza Communications; Dario Frommer, former State Assembly Majority Leader, whose law firm Akin Gump received $15,000 from CAHHC; Bob Balgenorth, President-Emeritus of the State Building and Construction Trades Council of California, who received $89,000 from CAHHC to KMA Consulting, Balgenorth's consulting firm; Kathy Bowler, former executive director of the California Democratic Party, who received $100,000 from CAHHC to K Bowler Consulting. 

No On 45 TV Advertising Lies

The No On 45 campaign, in addition to masking the health insurance industry's exclusive funding for the commercials, confuse the public by falsely claiming the public will have to choose between a state bulk purchasing pool (Covered California) for some health insurance consumers (1.2 million) and rate regulation for 6 million individuals and small businesses. Prop 45 retains both.   (The Sacramento Bee published a similar critique "Ad targeting rate regulation overreaches," September 18th http://www.sacbee.com/2014/09/18/6718372/ad-watch-ad-targeting-rate-regulation.html)

The television advertisement misrepresents Prop 45 in the following ways:

• By implying that consumers have to make a "choice" between Covered California and Prop 45, the TV ads falsely suggest that passage of Prop 45 will lead to the shuttering of California's new health benefit exchange. Not true. By making insurers justify their rate hikes and rejecting excessive increases, Covered California's negotiating ability will only be strengthened. Covered California has not taken an official position on Prop 45.
  
• The TV ads say that passage of Prop 45 "will give one politician the power to override the commission." Covered California cannot approve or reject rates as "excessive," so there is no rate decision to be overridden. Prop 45 extends no other new power to the insurance commissioner except to make sure rates are not excessive.
  
• The TV ads say that Covered California "rejects plans that are too expensive." In fact, Covered California negotiates with insurers behind closed doors, but cannot reject unreasonable rate hikes. No federal or California state agency can.  35 other states require rates regulation, but not California. Rate regulation has helped health benefit exchanges created under the Affordable Care Act in states like Oregon, Maryland and New York by further reducing rates that these exchanges were able to negotiate.  Covered California has the authority to exclude a plan from the exchange, but with just 4 insurance companies controlling 94% of the exchange market, it is an empty power. Covered California cannot exclude a plan because to do so would reduce the number of Californians with access to health coverage – the direct opposite of its goal to expand coverage to more Californians. 
  
• The ads state that passage of Prop 45 will allow one politician "to take millions in contributions from special interests." In fact, since 2002, no elected California insurance commissioner has accepted a campaign contribution from an insurance company, as opposed to legislators and the Governor who do take significant contributions from insurance companies and appoint the exchange's board members. Prop 45 also makes no changes to campaign finance laws.
  
• The ads tell voters to "keep the independent commission." Prop 45 does not do away with or reform Covered California.
  
• The ad's disclaimer illegally fails to use a phrase that describes the sponsors' industry. The sponsors are the California Chamber of Commerce, two health insurance associations, and the California Hospital Association, but the committee name includes neither all the sponsors' names, nor their industry affiliation, such as "insurance companies" and "businesses." It also violates the prohibition against interspersing major donor names that should be listed first with other constituencies such as  "doctors" and "nurses" who have never given a dime to the campaign.

TV AD SCRIPT:

We all want to control health care costs, and this year we have a clear choice. We can keep the new independent commission established last year to negotiate rates and benefits for consumers and reject plans that are too expensive. Or we have Prop 45 that will give one politician the power to override the commission and at the same time take millions in campaign contributions from special interests. The choice is clear, keep the independent commission and vote no on 45.

Paid for by No on 45—Californians Against Higher Healthcare Costs. Major funding by Kaiser Foundation Health Plan Inc., Wellpoint Inc., and Blue Shield of California with a Coalition of Doctors, Nurses, Hospitals, Health Plans, and California Employers.

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

SOURCE Consumer Watchdog Campaign