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October 14, 2007

California Should Not Adopt Massachusetts-Like Mandatory Health Insurance

On Friday, the Foundation for Taxpayer and Consumer Rights stated that a recently implemented Massachusetts law that makes the owning of health insurance mandatory for all state citizens fails to be a healthy model for California health reform.

Under the new Massachusetts law, by April 15, 2008, all residents have to prove on their tax returns that they have purchased private health insurance or be charged with financial penalties.

A proposal modeled on the Massachusetts law was put forth on Wednesday by California Governor Schwarzenegger. The FTCR says that his proposed law fails to take into consideration the affordability crisis faced by Massachusetts residents while also including a provision of that would encourage insurance companies to raise their premiums. Under that proposal, California health insurance providers will be allowed to keep 15% of premium revenue for overhead and profit.

The FTCR points out that coverage in Massachusetts is already considerably more expensive than promised and insurers, whose premiums are not capped or regulated, have indicated that they will increase their premiums again next year.

"Insurers, who will keep 15% of premiums no matter what they pay doctors and hospitals, will be all too happy to pay more--and charge policy holders more--in order to keep more," said Jerry Flanagan of the FTCR.

Massachusetts officials have estimated that 18% of those residents currently uninsured cannot afford insurance at all , and the vast majority of new enrollees since the ostensible July 1st, 2007 deadline have needed to receive subsidies to pay for their policies.

"They will end up paying more for less health care -- an inevitable outcome when individuals are forced to purchase private health insurance and costs are not regulated. While it is beneficial to provide health care to the working poor, the Massachusetts plan is far from solving the un-affordability of private insurance for middle-income workers. The plan, with its very small employer penalties, also may encourage employers to steeply reduce or eliminate work-based coverage," said Carmen Balber of the FTCR.

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Posted by healthinsurance at October 14, 2007 04:41 PM