Overview
With the costs of health care skyrocketing, and almost one-fifth of Californians currently going without health insurance, major reform is needed to improve public health and protect consumers.
Insurance companies need to change the way they do business.
Right now insurers can and do refuse to provide health insurance to consumers, and when they do offer to insure consumers with health conditions, they often price them out of the market with exorbitant rates. Nearly 90 percent of working age adults who lacked employer coverage and attempted to obtain insurance on their own were either rejected either for medical reasons or they found it too expensive to obtain coverage. The purpose of health insurance is to spread the risks and the costs of poor health among a large pool of people, not to take the healthy and refuse the sick. Insurance companies should be required to accept all applicants, and charge those consumers a fair rate for their insurance.
CALPIRG also is working to ensure that insurance companies spend our money on health care, rather than administrative overhead or profits, by requiring them to spend at least 85 percent of premium dollars on patients’ health. HMOs are already required to meet this threshold, but some insurers spend as little as 50 cents per premium dollar on health care, contributing to the rising cost of care.
We need to contain the rising costs of health care.
To contain the rising costs of health care, capping the administrative overhead of the insurers is a good start. Health care reforms under consideration would also allow the new state health care purchasing pool (referred to as Cal-CHIPP) to negotiate bulk rates for prescription drugs, and require greater transparency from HMOs and health insurers to enable purchasers to compare different plans and their rates and more effectively negotiate discounts.
Employers should help provide health insurance for their workers.
The benefit of employer-based insurance is that a group of people can negotiate for lower insurance rates much more effectively than an individual. Both the Governor and the Democratic leadership in the Legislature agree with CALPIRG that all employers should chip in a specific amount of money for their workers’ health insurance, either by purchasing insurance for them directly or paying into a state purchasing pool that will negotiate insurance plans for those workers.
Currently, employers who provide coverage for workers spend slightly more than 10 percent on health care. CALPIRG supports a legislative proposal to require employers to spend at least seven and a half percent of payroll on health care, rather than the Governor’s proposal to spend only four percent of payroll on health care. Four percent is not enough to cover the costs of employees’ health care, leaving taxpayers on the hook to fund the remaining costs.
We need to dramatically reduce the number of uninsured.
Twenty percent of California’s population under the age of 65 does not have health insurance. Uninsured residents have or are at risk of significant financial hardship when they encounter health problems. The uninsured also drive up the cost of health care for everyone, because the uninsured have less access to preventative health care and they are more likely to go to the emergency room – the most expensive place to get treated – when they do have health problems. Health reforms under consideration would provide health insurance to most or all of the uninsured.
