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NEWS RELEASE
Sep 30, 2003


CONTACT: Jerry Flanagan, (415) 633-1320 or (415) 497-1710

CA Law Could Be National Model to Address Uninsured Rates If Cost Controls Are Adopted

FTCR called upon Governor Davis sign the bill and pledge his support for HMO premium regulation, price controls on doctors and hospitals
SAN FRANCISCO -- A new report released today by the US Census Bureau shows that uninsured rates are increasing fastest among the nation's middle class as a result of fall-offs in employer-sponsored health care. A bill on California Governor Davis' desk would increase access to care by requiring employers to provide health care benefits to employees and eligible dependents beginning in 2006, according to the Foundation for Taxpayer and Consumer Rights (FTCR).

The bill, SB 2, could be a national model for health care reform if subsequent legislation to provide cost controls is adopted, according to FTCR.

"Profiteering by health insurers, hospitals, and doctors has made health care coverage increasingly unaffordable for average consumers," said Jerry Flanagan, a consumer advocate for FTCR. "Governor Gray Davis should take the first step to stabilizing our health care system by assuring that workers have access to care. The second step must be to reign in excessive and unfair health care costs. This one-two punch to the health care crisis would put California back on the map as a national leader in health care reform."

Under the proposed "pay or play" plan, employers with 20 or more employees must either provide health care benefits directly to workers or pay a fee for the worker to receive care from a state run health insurance purchasing pool. The bill's implementation date has been delayed until 2006 for large employers, 2007 for medium employers, and employers with 20-49 employees will not be required to participate unless a 20% tax credit is adopted first. The bill does not yet provide protections for consumers on the amount of out-of-pocket charges they will be required to pay in order to access medical services.

In a letter to Governor Davis yesterday, Jerry Flanagan of FTCR urged Davis to sign the bill and to commit to develop cost controls in the 2-year interim before the bill will take effect:

"For good reason the legislature has delayed the bill's implementation until 2006: appropriate cost controls on the amounts that hospitals, physicians, and insurers can charge consumers and small businesses have not yet been established," wrote Flanagan. "However, now that there is a mandate for employers to provide health care, we have a deadline to make the system affordable. That's good news."

HMOs and health plans claim that skyrocketing premiums are the result of increasing medical costs. However, in 2002, the cost of health insurance for a family of four increased 250% more than the rate of medical inflation according to a 2002 Kaiser Family Foundation report. A report released in September by the Kaiser Family Foundation found that employers are passing on higher costs to employees. Since 2000, employees' share of premiums for family coverage has increased from $1,619 to $2,412 -- a nearly 50% increase.

FTCR called upon Governor Davis sign the bill and pledge his support for HMO premium regulation, price controls on doctors and hospitals, and a state-run insurance pool open to all Californians, whether employed or not, by 2006, the date of the plan's phase-in.

The Foundation for Taxpayer and Consumer Rights is a national non-profit and non-partisan consumer advocacy organization. For more information visit us on the web at www.consumerwatchdog.org or www.calhealthconsensus.org

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