Health Insurers Pump $25 Million Into Campaign To Continue Price-Gouging And Passing On Unreasonable Costs to Consumer, says Consumer Watchdog Campaign

SANTA MONICA, Calif., April 23, 2014 /PRNewswire-USNewswire/ -- Health insurance giants Kaiser, Blue Shield, Wellpoint/Anthem Blue Cross, Health Net, United Health and the California Association of Health Plans have now given over $25 million of policyholder money, including nearly $12 million this month, to the campaign against a November 2014 ballot measure that will prevent overcharges and misuse of premium dollars.

The opposition campaign, operating under the misnomer "Californians Against Higher Health Care Costs," is funded exclusively by the state's five biggest health insurers.

"California's biggest health insurers are spending tens of millions of policyholder dollars to be able to continue to pass on unreasonable spending on executive compensation, political contributions, advertising, investments and civil fines to consumers," said Jamie Court, proponent of the initiative and president of Consumer Watchdog. "This ballot measure will make sure that Californians who must now buy health insurance can afford it."

The "Justify Rates" ballot initiative will require that health insurance companies get permission from the state before raising rates the way auto and home insurance companies must.  Regulation of auto rates has saved drivers $102 billion since voters enacted the reforms two decades ago, according to the Consumer Federation of America.

California health insurers have hiked rates 185% since 2002, more than five times the rate of inflation.  Initiative proponents from Consumer Watchdog argue that since all Californians must buy health insurance, the premiums must be affordable.  

The ballot measure will prevent health insurance companies from passing on unreasonable costs to consumers, which auto insurance companies are prevented from passing on today, such as:

• Lobbying and political expenditures, including the $25 million the insurers have spent to foil Consumer Watchdog's initiative;
• Excessive reserves and unreasonable investments, such as the vast and growing pool of excess investment reserves California health insurers now keep. For example, Blue Shield has $3.68 billion reserve, or 1,667% more than required.
• Institutional advertising, such as Kaiser Permanente's "Thrive" campaign, which it reportedly spends $40 million to $50 million per year on.
• Excessive executive compensation: Nonprofit Kaiser paid then-CEO George Halvorson $9.9 million in 2012; COO Bernard Tyson, now CEO, made $4.7 million in 2012 and 8 executives made over $1 million.
• Fines and civil penalties, such as the $4 million fine recently levied by the state against Kaiser for its treatment of mental health patients.

Unlike in 35 other states, regulators in California cannot stop an unreasonable rate hike. For example, California Insurance Commissioner Dave Jones recently cited Blue Shield for imposing "unreasonable" rate hikes of 32% on helpless consumers over the last two years, but is powerless to stop them.  Blue Shield, which in 2012 had 3.3 million enrollees and $10 billion in revenues, gave $4.9 million to the group opposing the measure.

The Insurance Rate Public Justification And Accountability Act on California's November 2014 ballot will:

• Require health insurance companies to publicly disclose and justify, under penalty of perjury, proposed rate changes before they take effect.
• Make every document filed by an insurance company to justify a rate increase a public record.
• Require public hearings on proposed rate increases.
• Give Californians the right to challenge excessive and unfair premium rate increases.
• Prohibit health, auto and home insurers from considering Californians' credit history or prior insurance coverage when setting premiums or deciding whether to offer coverage.
• Give the insurance commissioner authority to reject unjustified rate increases.
• Allow the insurance commissioner to order rebates for consumers and businesses that are paying excessive rates.

Learn more the Insurance Rate Public Justification And Accountability Act at www.JustifyRates.org

SOURCE Consumer Watchdog Campaign