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Obama’s dare to SCOTUS could screw patients and help insurers

4:27 pm in Uncategorized by Consumer Watchdog


In a remarkable act of either stupidity or brinksmanship, the Obama Administration challenged the US Supreme Court to either keep the federal individual mandate to buy health insurance or throw out with it some of the most important consumer protections in the federal health care overhaul.

The Justice Department argues in a brief to SCOTUS that if the mandate is unconstitutional, then insurance companies cannot be forced to sell health insurance to people regardless of their preexisting conditions or to price their policies based on factors other than a patient’s medical condition.

In other words, give us mandatory health insurance or take from sick patients the right to have access to insurance at an affordable price.

WTF? Has the White House lost its mind?

New York has a system with NO mandatory health insurance, but the very take-all-comers provision and community rating pricing, which excludes price gouging based on illness, that the Justice Department says cannot work without the mandate.Obama advocated for such a system while running for president and distinguishing himself from Hillary Clinton. Now, according to his Justice Department, it’s just not possible?

New York may have high premiums, but so does Massachusetts, which has mandatory health insurance. Both states have recently adopted premium regulation to deal with reining in premiums. Consumer Watchdog’s study earlier this year found premium regulation to be the essential component for health reform to work, not mandatory insurance.

Obama’s attempt to force the hands of a Supreme Court that couldn’t even be shamed out of throwing the 2000 election to George W. Bush seems to be more than legal sophistry. The President seems to have said to himself so many times that mandatory health insurance is necessary for any pro-consumer reform that his Justice Department believed it.

Lower courts have ruled the mandatory purchase provision — which is wildly unpopular with public, unfair without premium regulation and possibly unconstitutional — could be struck from the federal law without losing the pro-consumer provisions. Now the Justice Department just gave the Supreme Court the blade it needed to gut the prohibitions against insurance companies refusing to sell insurance to people who need it most. Read the rest of this entry →

Time For A 1988-Style Voter Revolt?

4:52 pm in Uncategorized by Consumer Watchdog


The San Francisco Chronicle reported this morning on the front page about the landmark insurance reform we expect to be spending the next fifteen months working for.
Insurance companies, the legislature and recent court rulings have all turned against consumers, much like they had in 1988, when California voters struck back with the toughest insurance reform in America: Proposition 103.
By 2014, all of us will be required to buy health insurance or face tax penalties. The problem is that health insurance companies can charge whatever they like and raise premiums at will in California. This is the same scenario that drivers faced in 1988 when mandatory auto insurance laws forced drivers to pay for policies many couldn’t afford. Voters then required auto insurers to pay drivers a 20% refund and to get permission before they ever raised rates again.
Just like in 1988, insurance stalwarts in the statehouse are now holding insurance premium regulation hostage. The companies have given the politicians millions so they can make billions overcharging you. And, as in 1988, the California Supreme Court has issued several rulings taking away the right of policyholders to hold insurance companies accountable.
If we go to the ballot with a 1988-style 20% rollback in health insurance premiums, will you be with us?
Our “Proposition 103 Part Two” ballot measure will have to be filed by November 2011 in order to begin signature collection so it gets on the ballot for November 2012.
The main provisions of the ballot measure are as follows:
1- A 20% rate rollback in health insurance rates to reverse five years of unwarranted double-digit price gouging;
2- Require health insurance companies to seek permission from the elected insurance commissioner before raising rates, as auto insurance companies must, and application of other Prop 103 protections to health insurance companies;
3- Prohibit all insurance companies from raising your rates or refusing to renew you because of your credit score, claims or insurance history;
4- Allow consumers to join a non-profit public health plan administered by CALPERS instead of having to buy insurance from private insurance companies;
5- Correct court rulings that have misinterpreted the law to benefit the insurance industry;
6- Create a “three strikes and you’re out of California” law for insurance companies that repeatedly violate the state’s consumer protection laws
7- Prohibit health insurance companies from forcing you to sign arbitration agreements as a condition of enrollment.

We want to go to the ballot in November 2012. Will you be with us? Click here to sign up!
Together we can move health care reform forward in California and America.
Jamie Court is president of Consumer Watchdog and author of The Progressive’s Guide To Raising Hell.

Calif. Legislators: Choice Is Between Insurance Industry And Rest Of Us

3:20 pm in Uncategorized by Consumer Watchdog

PhotobucketLos Angeles Times business columnist Mike Hiltzik offers a stark choice to state legislators in his Wednesday column. What'll it be, has asks: the millions of dollars that the insurance industry pours into your campaigns and treasure chests, or the millions of Californians battered by health premiums that kill the family budget or company benefits account? Plus the 8.2 million Californians with no health insurance at all?
The choice Hiltzik lays out is between legislation (AB52 by Mike Feuer) that would finally give the state insurance commissioner the power to deny or modify unreasonable health insurance rate increases before they go into effect, and the exaggerated or outright false charges being slung by the industry. That opposition campaign is just a  cover for the real issue: the power of industry campaign money and its lobbying force.

From 2007 through this year, for example, Anthem Blue Cross has made campaign contributions totaling nearly $5 million to candidates, parties and political action committees, according to state records. Blue Shield has contributed more than $2.3 million in the same period…..
Across the country, prior approval of healthcare rates is becoming more the norm, now effective in 34 states and the District of Columbia for at least some policies, according to the Kaiser Family Foundation. The procedure closes a gap left by federal healthcare reform that leaves rate regulation to the states and provides only loosely for premium review. Once again, AB 52 provides state legislators with a chance to declare whom they really represent — their voters or their campaign donors.

The insurance industry is going after legislators that it has contributed to, or who otherwise look susceptible. That helps explain why the legislation barely squeaked through a key committee vote last week after two Democrats voted against it.
The final vote in the Assembly has to come by Friday. Lobbyists will be swarming the halls outside the chamber, intending to ride the last-minute chaos of speed-voting to kill the rate regulation bill. Among the lies the lobbyists will be forcing down legislators' throats is that regulation will somehow raise, not lower, insurance premiums. Again, Hiltzik nails it:

Last year both Aetna and Anthem backed away from huge rate hikes after independent actuaries found glaring mathematical errors in their rate filings.
A study in 2009 by the New York state insurance department found that these sorts of errors, and worse, were rife under that state's then-deregulated system, which resembled California's toothless regime. New York found that insurers routinely under-reported such errors and refunded (retroactively) only about a third of the ill-gotten excess to policyholders. The study helped goad lawmakers there into reinstating prior approval after about 15 years without it.
As it happens, California's health insurance lobby has tried to use New York's experience as Exhibit A for the case against prior approval. The association contends that five of the 10 states with the highest individual healthcare premiums are subject to prior approval, with New York leading the list. There's a problem with this claim, however: New York's prior-approval rules went into effect only this year. In other words, New York's high individual premiums are the result, if anything, of the absence of prior approval.
When I asked a CAHP spokeswoman where the figures came from, she said they conducted "some unique research." That's one way of putting it.

Even if AB52 passes the Assembly, it still has to take the same tortured path through the state Senate. The outrageous rate-spiking by insurance companies last year and this ought to be the final shove for honest health insurance regulation in California, just like the state has for auto and homeowner insurance. But in today's legislature, nothing is sure. To take action with a message to your legislator, click here.
If you've read this far and want to know more,  Read Consumer Watchdog’s new report on how rate regulation works to hold down premiums. And see what Sen. Dianne Feinstein says about the need for regulation.
Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

Clock Is Ticking: Bill To Curb Health Insurance Rates Squeaks Past Lobbyists In Key Vote

7:58 pm in Uncategorized by Consumer Watchdog


The health insurance industry's lobbying muscle in the California Legislature is legendary. It's the reason that the state's insurance commissioner remains all but toothless to reject outrageous spikes in health insurance premiums and rates, unlike in a majority of other states. So it's not a shock that a new version of a bill to let the state insurance commissioner reject or modify health insurance premiums barely squeaked through the state Assembly's Appropriations Committee late last week with the minimum 9 votes.

+++Take Action Here to Cut Insurance Premiums, Send a Message to Your Legislator+++

The bill will face another firestorm of industry lobbying when it comes up for a full Assembly vote in a few days.

This legislation ought to be a slam dunk, after Blue Shield tried to jam through premium increases of up to 86% in a single year. Aetna and Blue Cross weren't much better. The only reason any insurer backed down even a little was because of public rage, which is not a good regulatory tool in the long run. When every Californian is required to show proof of insurance as of 2014, Californians will be even more in need of protection from insurance industry greed. And nearly every major newspaper has supported health insurance regulation–the LA Times made its second strong editorial argument Tuesday. (text of editorial is below)

So what was up with the two Democrats–Charles Calderon and Jose Solorio–who voted against the rate regulation bill (AB 52, Mike Feuer)? First they reportedly tried to get author Feuer to accept last-minute substantive changes without a chance to examine what they meant–and Feuer rightly refused. Then Calderon and Soloio voted no. Hmm. Solorio is among the top five recipients of insurance industry money in the Assembly. And Calderon is the sponsor of a bill (AB 736)–strongly supported by the health insurance insurance and broker industries–that would remove consumer protections from health broker misdeeds or errors and indirectly raise health insurance premiums.

Two million Californians lost their insurance during the recession, bringing the state's total uninsured to 8 million. From the mail we get, a whole lot of people are right on the edge of having to drop Health insurance. It's long past time for the largest state in the nation to get a grip on health insurance spikes in the high double digits, even as overall medical inflation sinks to around 4% a year. Something is wrong with this picture, even if it's just right for insurance companies' record profits.

We hope Calderon and Solorio were just making a procedural protest and that they'll protect consumers, not insurance company profits, when the Assembly votes this week on AB52. It'll be close. Here's the button to Take Action.


A lid on health insurance rate increases

California regulators should be given the power to reject unreasonable increases in health insurance premiums.

May 31, 2011

Opponents of a bill that would allow state regulators to reject unreasonable increases in health insurance premiums are stepping up their attacks on the measure, contending that it would push premiums even higher and make healthcare less available. These arguments are a smokescreen, and lawmakers shouldn't lose sight of the need to give consumers of health insurance the same protection they have in auto and homeowners' policies.
One allegation is that the bill — AB 52, sponsored by Rep. Mike Feuer (D-Los Angeles) — would enrich the consumer advocates who challenge proposed rate increases. That charge is based on the bill's requirement that insurers cover the "reasonable" fees and costs incurred by advocates who make a "substantial contribution" to the ruling by regulators or the courts. The same perfectly sensible language is in Proposition 103, the initiative that empowered state regulators to reject excessive automobile, property and casualty insurance rates.
Giving consumers the opportunity to participate in rate reviews is a valuable counterweight to the shifting policies in Sacramento, where regulators' zeal often depends on who won the last election. And the "substantial contribution" requirement for getting fees reimbursed deters frivolous challenges. Consumer Watchdog, an advocacy group, says its interventions have reduced insurers' proposed auto, home and earthquake premiums by more than $2 billion since 2000; insurers have had to spend an additional $5 million to cover the consumer group's expenses.
Smaller premium increases might seem like a good thing to consumers, but evidently doctors and hospitals feel differently. Their trade associations are opposing AB 52, arguing that it could artificially reduce the rates insurers pay them. Such reductions, they say, could persuade more providers not to take Medicare and Medi-Cal patients because they count on reimbursements from private insurers to cover some of the cost of government-insured patients. But those cross-subsidies are precisely the sort of distortions and inefficiencies that policymakers should be trying to eliminate from the healthcare system, not prop up.
The healthcare reform law Congress passed last year tries to combat cross-subsidies, and it limits insurers' profit margins by tying them to the amount spent on medical care. That link, however, gives insurers a perverse incentive to grow their profits by inflating the amounts they pay doctors and hospitals. That's a good reason to give state regulators the power not just to review rates, as California law now provides, but to reject them when they're unreasonable. Here's another: As of 2014, the healthcare reform law will require all adult Americans to obtain health coverage. Regulators ought to have the power to stop insurers from gouging that captive market.

Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

Vermont Goes for Real Deal in Health Reform: Single Payer

8:25 pm in Uncategorized by Consumer Watchdog

PhotobucketCan you hear Blue Cross screaming in the distance? Vermont is about to hit the road toward a real (if modified) single-payer health care–Medicare, but for everyone. Cut out the middlemen, save some money, cover more people.

In Washington, insurance companies are deploying their lobbying might to chip apart the gargantuan federal health reform–at least the parts that won't turn them a bigger profit. States governed by "kill all government" leaders are trying overturn the whole reform law in federal courts. But Vermont has turned its back on the catfight.

It won't be easy. Vermont has to persuade the federal government to hand over, in cash, the amount that it would otherwise cost to enable the privatized health reform passed by Congress last year. It still has to figure out how much single-payer will cost, how and how much its citizens and employers will pay and how the state will directly reimburse doctors and hospitals. (Large self-insured employers that choose to stay with private plan administrators may do so). But the state wll also shed a lot of expensive insurance baggage.

From a Kaiser Health Foundation report on the Vermont legislation:

Supporters of the change … point to statistics showing that health spending more than doubled in Vermont between 1992 and 2009. [Gov. Peter] Shumlin's office has estimated the state would save $500 million in the first year of a single-payer plan.

That would come from reduced insurance marketing and administrative costs. Hospitals and physicians also lose time and money in filling out claims information for every private health plan they bill.

Not to mention all the hours billed by backroom administrators and lawyers to stop patients from getting care. And all the trees and electrons that will be saved when doctors' offices can quit spending as much time on paperwork as they do on patient care.

As Gov. Shumlin signs the single-payer legislation Thursday, insurance companies will be gearing up paint Shumlin as a mad socialist intent on letting government killy granny. But the state has a strong reformist record, and already stretches its Medicaid dollars to cover more of its population than other states.

A New York Times story on the physician who's credited with getting the single-payer ball rolling in Vermont also contains the anecdotes that should sustain the push to get it done:

Dr. Richter said she embraced the idea of a single-payer system as a young doctor in Buffalo, where many of her patients put off crucial treatments because they were uninsured. As a medical student, she saw a patient with a life-threatening heart infection caused by an infected tooth that had gone untreated because he lacked dental insurance.

“He was in the hospital for six weeks, and I was like, ‘This makes no sense,’ ” she said. …

Once, she presented [to the Vermont Legislature] a printout of all the insurance companies her small practice in Cambridge had billed over five years.

“It was like 190 pages long,” she said. “Here we were, this tiny rural clinic having to bill all these different addresses. And all of them have different rules and reimbursements; I mean, it’s ridiculous.”

While insurance companies tremble at the idea of even a small, green and civil state actually instituting a Medicare-for-all system, Vermont's concept is also taking hits from the left. Hard-nosed advocates for absolute single-payer, including Physicians for a National Health Program, call the plan "well short of the single-payer reform needed.” They object to letting the largest employers keep using private companies to administer benefits. That's about the best example I've ever seen of letting the perfect be the enemy of the (very) good.

Other states including Oregon would also like to take the federal money and try to do more with it at less cost than private insurance. Oregon Sen. Ron Wyden has introduced a bill to allow states to ask for waivers that would fund alternative systems now, rather than in 2017 when the existing federal law would free up money for state plans.

Vermont, however, is a step ahead. It has a real single-payer plan and a backup plan–go along with the federal reforms while doing all the planning. Then whenever the state can break loose the federal money, it will be ready to break loose from the insurance industry. That's what's causing Blue Cross such unbearable pain.
Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

Sen. Feinstein Makes Tough Pitch for Rate Regulation and CW’s Report

7:08 pm in Uncategorized by Consumer Watchdog


Washington D.C. — It's hard to imagine that a briefing on rate regulation and a new Consumer Watchdog report would draw a fascinated audience, but this is DC.  Journalists and nonprofit advocates spent 90 minutes Wednesday as Sen. Dianne Feinstein and an expert panel made an impassioned call for getting health insurance companies under control with tough regulation of the rates they can charge. As the senator put it, without mincing a single word:

“While insurance premiums continue to spiral out of control, CEO's paychecks are getting bigger, and insurance companies are spending less on medical care and more on profits. Today, in 17 states including California, state regulators do not have authority to block or modify insurance rate increases that are excessive, unjustified, or discriminatory. In order to protect consumers from skyrocketing insurance premiums, state regulators need this explicit authority to ensure rates are justified. This is why I have introduced the Health Insurance Rate Review Act of 2011, and why I have endorsed state legislation in California, AB 52, to close this loophole.”

The senator was the lead speaker as Consumer Watchdog released a report leaving no doubt that the only way to protect consumers from spiraling rate increases is what's called prior approval rate regulation: The insurance commissioner gets to see rate increases well ahead of time and can reject them outright or demand modification. Consumers can challenge excessive rates on their own, and be paid for their time. It's the only way to keep insurance companies honest, and also enlist them in actually helping to keep down overall health costs.

The report, called "Health Reform and Rate Regulation: Can't Have One Without The Other," outlines why California has the best, most protective model of rate regulation–except it applies only to auto and other property and casualty insurance. The report illustrates both successes and failures in other states, and outlines a role for the federal government in making sure states protect consumers.

For the short version, here's the news release.

Consumer Watchdog founder Harvey Rosenfield, Washington director Carmen  Balber and Maine Superintendent of Insurance Mila Kaufman (a creative and fair consumer advocate) held a lively panel discussion–the journalists present stuck around for the whole thing, which is not the usual way.

Video is to come–I know that with a topic as delicious as rate regulation, no one can wait.

Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

Is AHIP Having a Bernie Madoff Moment?

10:48 am in Uncategorized by Consumer Watchdog

Massachusetts has the highest or near-highest health insurance premiums of any state in the nation and it's the only state that mandates the purchase of health insurance by every resident. Yet the health insurance industry, in hunting for ways to sell the mandate to Americans who hate the idea,  has concocted a ruse that a lot of people are actually buying.

The industry's chief lobbying group, America's Health Insurance Plans (AHIP), is claiming that its surveys of members–i.e. health insurance companies– show a drop in annual premiums for single individuals in Massachusetts from $8,537 in 2006, when the state adopted an individual mandate, to $5,143 in 2009. That's 40% off–pretty spectacular! The AHIP claim is being repeated in news stories and blogs, particularly by authors who favor the health insurance mandate, and don't want to look too hard at such statistical manna from heaven.

However, people who work in the Massachusetts health insurance market told me they don't believe these numbers. Federal and state data on Massachusetts also dispute the data AHIP is pushing. Massachusetts never saw a price drop of that size in any market, and any price cut in the individual market was because of a merger with the small business market, and because insurers started selling stripped-down policies in 2007. Price changes had little to no relation to the purchase mandate.

You can see the 2006 and 2009 AHIP surveys for yourself here and here. No one else–not the even the state of Massachusetts–regularly makes public state-level year-to-year data on  private health insurance sales of individual and family policies It's all a trade secret. So much for transparency and consumer empowerment.

The few available other sources show dramatically different numbers.

A report by the National Conference of State Legislators in 2007, citing individual survey data from the Joint Economic Committee of the U.S. Congress, stated that Massachusetts’ average premium in the individual market in 2006 was $4,841 a year, barely over half of the purported AHIP number. See the study data here (in final table).

A recent report by the federal Agency for Health Research and Quality on Massachusetts’ employment-based group insurance market gives these historical premiums for single coverage in the employer-based health insurance market:

2004:  4,141

2006:  4,448

2009:  5,268

While the group and individual markets are not identical in pricing, they roughly follow one another.

Massachusetts also began its reforms with a lower rate of uninsured people than any other state, and its increase in nongroup private insurance purchases since the 2006 mandate amounts to only 12% of the newly insured. (Data from Milbank Quarterly.)

A 2010 report on health costs in Massachusetts shows that AHIP is  mixing apples and oranges. The individual market and the small-group market in Massachusetts merged in 2006, and the inclusion of small businesses pulled down prices in the individual market by a couple of percentage points (though prices for small businesses went up by nearly the same amount). Insurers were also allowed to offer cheaper, stripped-down plans in the merged market. From the state report:

“The lowest-cost small group premium fell markedly in July 2007, when carriers introduced new low-cost products in the newly merged market (see Appendix, Figure C.2). These new products may have been introduced as Bronze coverage products made available to individuals through the Health Connector’s Commonwealth Choice program (as many

of the carriers in the study participate in Commonwealth Choice) or for other strategic reasons. … Overall, individual premiums declined significantly in 2008 [from $5,364 per year to $4,752) due to the shift in membership toward lower-premium products in the merged market. However, premiums for individuals in pre-merger products continued to increase.”

Even if the policies being bought were equal, which they were not, the one-time 13% decrease described in the state report is a far cry from the 40% drop being trumpeted by AHIP. And the drop was only for new policies–those who were already insured continued to see premiums increase.

AHIP should be ashamed of itself for touting its surveys as real data, though lobbyists are not well-acquainted with the concept of shame. What surprises me, though, is how easily AHIP has gotten people to believe its numbers. Then again, maybe not so surprising: Bernie Madoff didn't get rich off of skeptics.


Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

Progressives Should Be Cheering Virginia Ruling Striking Down Mandatory Health Insurance

12:58 pm in Uncategorized by Consumer Watchdog

If anything can save Democrats now, it's populism — the notion that standing with 80% of Americans is real power. That's why the White House and progressives should be cheering the decision by a conservative Virginia judge to strike down the highly-unpopular federal mandate to purchase health insurance and preserve the rest of the federal health care reform law.

Conservatives have tried to repeal the mandate that everyone must buy health insurance as a way of taking out the full law in the court. Today's ruling makes clear that the popular and progressive parts of health care reform could go forward without the big sop to health insurance companies — mandatory purchases without regulated premiums.

Why would a progressive like me support repeal of mandatory health insurance purchases?

70% of Americans consistently oppose mandatory health insurance purchases.

If the last two elections have taught Washington a lesson, it's that we can do anything if 70% of Americans agree and do nothing if a majority cannot agree.

Most of the progressive parts of health care reform – subsidies to buy insurance for the poor and rules to make the marketplace fairer – enjoy 60% to 70% public support. Mandatory purchases, however, will consistently suffer the public's wrath because of popular distrust of the insurance industry and the high cost of health insurance premiums. Congressional refusal to limit how much health insurance companies can charge will ensure Americans' distaste only grows.

This issus is a ticking time bomb for Democrats and the courts may yet defuse it.

Beneath the polling, of course, is a strong social mores that the government should not be forcing Americans to buy health insurance that they cannot afford.

As a candidate, President Obama agreed with this popular sentiment. He argued, in stark contrast to Hillary Clinton, that, "The reason people don't have health insurance isn't because they don't want it, it's because they can't afford it." Once in office, Obama conceded to the Washington wisdom that government cannot force insurance companies to sell policies to all citizens without requiring that everyone have to buy it.

The notion that mandatory insurance is necessary for a "take-all-comers" law to succeed, like so many assumptions in the Beltway, needs to be reexamined. Fear of gaming by those who won't buy insurance until they are sick can be alleviated by creating greater carrots for buying coverage and less severe deterrents for failing to, such as a limited national open-enrollment period.

Current law now requires Americans to spend 8% of their income on health insurance by 2014 or face fines. Sliding scale subsidies would assist a family of four up to $88,000, but the $7,000 the family would have to pay could not even buy a policy likely to meet their needs, since the average policy for the family costs more than $12,000 today.

Mandatory health insurance has not produced lower premiums or health care budget savings in Massachusetts, the laboratory for the experiment. Massachusetts recently adopted strong premium regulation to give consumers relief from the highest health insurance rates in America.

New York, which has a take-all-comers law, is often cited as the disastrous consequence of the failure to enact mandatory purchases. But the empire state also is embarking on tough premium regulation to deal with its problems — which still rank it lower than Massachusetts in premium prices. Premium regulation is the key.

This principle set me on my journey as a consumer advocate more than twenty years ago. Californian endured double-digit premium hikes on their auto insurance under mandatory auto insurance laws imposed in 1986. This sparked a voter revolt in 1988 led by the founder of the consumer group I now head, Consumer Watchdog. Proposition 103, passed via ballot measure, created the nation's toughest premium regulation. A 2008 report by the Consumer Federation of America found California motorists have saved $62 billion on their auto insurance bills. Congress has no such appetite for tough regulation, however.

Driving is discretionary, so you can always take the bus rather than buy auto insurance. Breathing and not having to pay more than 8% of your income are the only requirements for the 2014 federal insurance mandate. When the public feels that blow, the backlash will make the midterm election look like a baby shower.

There's a lot worth saving in the health care reform overhaul, including provisions I fought for to limit out-of-pocket costs and force insurers to be fairer. Democrats should want to repeal the mandate because otherwise the most progressive parts of health reform could be lost. Laws tend to be repealed based on their most objectionable provisions.

Despite their moral objections to the mandate, Republicans may not want to diffuse the ticking time bomb of mandatory health insurance before it blows up on the Democrats. But they should be wary of standing too close when the bomb goes off. Narrowly repealing mandatory health insurance is something the public and many Democrats agree with, it's the common ground that Americans overwhelming stand on. The political establishment should join them.


Posted by Jamie Court, author of The Progressive’s Guide to Raising Hell and President of Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

Legal Challenges to Mandatory Health Insurance Are Good for America and Progressives

10:25 am in Uncategorized by Consumer Watchdog

Death and taxes may be inevitable in life, but in politics what’s inevitable is that you will have to face public opinion and the Constitution. President Obama is rightfully having to confront both over the worst flip-flop of his presidency: his endorsement of mandatory health insurance purchases.

As the New York Times reports, courts are calling into question mandatory health insurance’s constitutionality.

The courts are right, and so was Obama when he opposed mandatory health insurance purchases on the campaign trail on the grounds that people want health insurance, they just cannot afford it.

Not only did the President betray a campaign pledge, he turned his back on public opinion — which runs 2 to 1 against mandatory health insurance purchases.

A federal judge in Florida has made clear the mandatory purchase law tests the limits of the federal government’s power. This is no right wing judicial conspiracy. Loyola Law school professor Carl Manheim and I, both of us progressives, made the same arguments in a Los Angeles Times oped two years ago when Obama, as a candidate, opposed mandatory health insurance purchases and Hillary Clinton supported it.

Our cautionary arguments then sound a lot like the preliminary thoughts of Roger Vinson of the Federal District Court in Pensacola, Fla now. Here’s what we wrote in the Los Angeles Times:

Are health insurance mandates constitutional? They are certainly unprecedented. The federal government does not ordinarily require Americans to purchase particular goods or services from private parties.

The closest we come is when government imposes a condition on the grant of a discretionary benefit or permit. For instance, in most states, you must have auto insurance to drive a car, or you are required to install fire sprinklers when building a new house. But in such cases, the "mandate" is discretionary — you don’t have to drive a car or build a house. Nor do you have a constitutional right to do so.

But Americans do have a constitutional right to live in the United States. Accordingly, neither federal nor state governments can require you to purchase health insurance as a "condition" for residency. The Supreme Court has drawn a distinction between requirements that are flat-out imposed by government and those imposed as a condition for discretionary benefits.

One Washington, DC "liberal" group Families USA, which has gotten quite chummy with the insurance companies and drug companies during the reform debate, sent out an email blasting the judicial assault on "reform." The truth is mandatory health insurance is the regressive, not progressive, part of the new federal health care law.

The progressive part of the law, squarely within the confines of the Constitution and supported by strong public opinion, are the reforms that rein in insurance company abuses and provide subsidies to the poor to get health coverage. Progressives should hope mandatory health insurance is voided by the courts because it makes the rest of health care reform much more palatable. Any coercive use of government to help a hated industry that is opposed by more than 60% of Americans is not progress.

The courts would be right to say the government went too far in requiring all Americans to buy mandatory health insurance too. As Carl Manheim and I wrote defending Obama’s principled stand against mandatory insurance in 2008:

In fact, under the law, there’s a big difference between participation in a government health program funded by taxes and privatizing such a program, with individuals forced to purchase private health insurance.

Taxation involves representation, which is the case when Congress appropriates money and controls a government program for the general welfare. This describes Social Security and Medicare. But government cannot simply delegate its taxing powers to private business.

What representation do we have in the insurance firms whose products we would be required to buy, at prices and terms they set? Can we vote out an insurer’s board of directors for denying claims or paying its CEO a multimillion-dollar salary? Here too the Supreme Court has drawn a distinction between taxes imposed by government and mandatory fees set by entities with private interests.

A health insurance mandate is essentially a forced contract, in which one party (the insurer) gets to set the terms. You must buy their policies, even if you prefer to self-insure, rely on alternative medicine or obtain treatment outside of the system. In constitutional terms, such mandates may constitute a violation of due process or a "taking of property."

Requiring Person A to give money to Person B is a "taking," whether or not something of value is given in return. Let’s say the state required every resident to buy milk, on the rationale that milk consumption benefits public health. That’s either a constitutionally forbidden taking (of money) or a violation of due process.

These constitutional rights aren’t absolute. Given a compelling enough reason, government can interfere with your person and property. It can require, for instance, that your child be vaccinated before attending public school. But there is usually an opt-out, such as private or home schooling. We are not aware of any opt-outs for most people in the mandatory health insurance plans being discussed.

For the White House and Democrats, embracing this inevitable truth should come sooner rather than later.


Posted by Jamie Court, author of The Progressive’s Guide to Raising Hell and President of Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.