Cost of Massachusetts Health Insurance Mandate to Rise 85% -- $400 Mil -- in '09;...

Thu Jan 24, 2008 5:45pm EST

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Cost of Massachusetts Health Insurance Mandate to Rise 85% -- $400 Mil -- in
'09; CA Mandate Proposal Certain to Face Similar Increases


Also, Big Pharma Gives $400K to Prop 93, Drops Opposition to
Schwarzenegger/Nunez Health Bill After Plan Change

SANTA MONICA, Calif., Jan. 24 /PRNewswire-USNewswire/ -- A projected 85%
increase in the cost of Massachusetts' mandatory health insurance law by 2009
should send up red flags that a similar California plan is also insufficiently
funded, said the Foundation for Taxpayer and Consumer Rights (FTCR).
Massachusetts costs will increase by approximately $400 million primarily
because the state underestimated the number of new enrollees in
state-subsidized insurance plans, the Boston Globe reported today.

California mandatory purchase legislation eliminated another opponent, the
pharmaceutical industry, prior to a committee hearing in the state Senate
yesterday. The companies dropped their opposition in response to an amendment
that drastically weakens the bill's original mechanism for reducing drug
costs, according to FTCR. At the same time, the drug companies' lobbying arm
contributed $400,000 to Proposition 93 on Tuesday, the ballot initiative that
would extend the terms of Senate pro Tem Don Perata and Assembly Speaker
Fabian Nunez. The companies' new concern is being cut out of the benefit
package, necessary according to the Legislative Analyst to hold down costs.

"Drug companies got the language they didn't like out of the healthcare bill
and thanked the Speaker with $400,000 towards his term limits extension
initiative," said Jerry Flanagan of FTCR. "This is more evidence that the
healthcare bill is more about protecting politicians' power than California

California's Legislative Analyst issued a warning that cost estimates in
California are inadequate in testimony to the Senate committee, suggesting
that proponents' estimate of the number of uninsured is too low. She also
projected a $4 billion deficit in health plan financing in just five years if
insurance premiums are just $50 a month more expensive than the Speaker and
Governor's projections. FTCR called that a likely scenario given that nothing
in the bill adequately limits premium increases by insurers and, as the
Legislative Analyst contends, Speaker Nunez's cost projections are likely too

"The Speaker's mandatory health insurance scheme has no provision for
inevitable increases in premium costs, and he has purposely low-balled the
number of uninsured to make the numbers add up. The funding's just not there.
When state financing fails, more of the cost burden will be borne by
California families," said Carmen Balber with FTCR. "Massachusetts' mistakes
should be informing the California debate, instead proponents are trying to
sweep them under the rug."

Cost increases in Massachusetts are relevant to California, said FTCR, because
they stem not from the plan's funding source (which differs between the
states) but on assumptions about the health insurance market and the
uninsured. Both states underestimated the number of uninsured when projecting
costs, and the double-digit increases in the cost of health coverage that are
projected in Massachusetts are another probability not considered by
proponents of the California plan.

SOURCE  Foundation for Taxpayer and Consumer Rights

Carmen Balber, +1-310-392-0522 ext. 324, or Jerry Flanagan, +1-310-392-0522
ext. 319, both of the Foundation for Taxpayer and Consumer Rights
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