Consumer Federation of California

FOR IMMEDIATE RELEASE: October 30, 2007

CONTACT: Richard Holober (650) 375-7843, Zack Kaldveer (650) 375-7846

(CA) – Today the Consumer Federation of California (CFC) announced its opposition to the Governor’s health reform proposal. The statement reads:

"The Governor
deserves credit for focusing California’s attention on our state’s
broken health care system. This renewed spotlight on health care reform
has been a welcomed development for consumers. Unfortunately, ten months after anointing 2007 as the "Year of Health Care", the Governor has offered a plan that still fails to address two fundamental components of any credible health care reform proposal: affordability and cost containment.

The
Governor’s proposal doesn’t control skyrocketing health insurance
premium costs, it lacks cost standards for deductibles, co-pays, or
hospital charges, it doesn’t specify which health services are to be
included in employer-provided plans, it doesn’t reign in pharmaceutical
industry price gouging, and it forces moderate income uninsured people without job-based coverage to purchase insurance that is either unaffordable, or that does not cover most medical expenses ("Individual Mandate").

The individual
mandate will force a family of three earning as little as $60,100 a
year, that lacks employment-based coverage to purchase insurance with
no state subsidy. Most families would purchase catastrophic coverage
with high deductibles. Out of pocket health costs could reach as high
as $10,000 a year. No one should be required to buy insurance that they
cannot afford – and that provides no meaningful coverage – simply to
allow the Governor to declare that he has achieved universal coverage.

To help pay for the
plan, the Governor would require employers to spend an amount equal to
zero to four percent of their payroll on health expenditures, or
purchase coverage through a state run purchasing pool. Four percent is
simply not enough to fund comprehensive health services. The average
employer who provides coverage already spends over 12 percent of
payroll for health care. Compounding this insufficient employer
contribution is the absence of any guarantees that the coverage these
payments would buy will have adequate benefits. 

In search of another revenue source to help cover the poor, the Governor now proposes to sell the lottery.
He believes that a private operator will bring in more revenue. We
believe its bad public policy to entice Californians of modest means to
gamble away even more money.

We oppose the Governor’s proposal because it isn’t affordable to many consumers, it doesn’t control insurance premium prices and it doesn’t guarantee a minimum standard of coverage.
It is our hope that after the Governor’s proposal is defeated, he and
others will move forward with new proposals that control costs, improve
coverage, guarantee affordability, and that remove the for-profit
insurers from their dominant role in the system."