Consumer Watchdog – President-elect Obama: Continue to Oppose Mandatory Purchase of Junk Health Insurance

Santa Monica, CA -- The nationally recognized Consumer Watchdog urged President-elect Obama to oppose the health insurance industry's self-serving plan detailed today requiring every American to buy junk insurance policies or face tax penalties or other fines. The plan would not limit what insurers can charge or reduce health insurance profit and overhead—the fastest growing component of health care spending. As a candidate, President-elect Obama opposed such mandatory purchase requirements.

Click here to download Consumer Watchdog's letter to President-elect Obama opposing the plan.

The plan would allow insurers to ignore HMO Patients’ Bill of Rights laws passed in 44 states. Hardest hit under such an approach would be states like California, New York, Massachusetts, Texas and Virginia, which have adopted more protective standards than other states. These hard-fought protections include a woman’s right to visit an OB/GYN, screenings for cervical and prostate cancers, newborn care, mental health care, a right to a second opinion and guarantees of independent medical review if an insurer denies coverage for a medically necessary treatment.

In a detailed letter sent yesterday, Consumer Watchdog urged President-elect Obama to fulfill his campaign pledge to make health care affordable and available by allowing any American to join Medicare, regardless of age. Competition with a low-overhead health insurance alternative provided by Medicare will force private insurers to prove that they can be cost-effective while offering similarly comprehensive coverage. Leveling the playing field between private insurers and the "public option" by requiring all players to guarantee access at a fair price would significantly reduce costs and increase access to health care.

Of the requirement that all Americans must buy private insurance, Consumer Watchdog wrote:

"A mandatory purchase regime, particularly one without a true public option such as universal access to Medicare and without vigorous cost controls and guaranteed benefits, amounts only to a government-funded customer delivery system for the fragmented, wasteful private insurance market. It will not solve our nation’s health care problems and will only encourage the industry to demand higher premiums and more taxpayer subsidies, while providing less health care.

"There is a big difference between universal participation in a cost-effective government program that protects us all (like Medicare) and being forced to buy an unregulated private product. A mandate may get us closer to universal insurance coverage, but we'll still be far from achieving universal health care. Why? Because the requirement will likely be for 'affordable,' bare-bones policies–the kind that comes with $5,000 deductibles, big co-pays and holes in coverage and benefits."

The letter provides three critical recommendations for health care reform:

* The most efficient and cost-effective way to provide the “public option” to the private market that Obama promised during his campaign is to open Medicare to all Americans.
* Any new federal health care reforms should not preempt state laws and regulations; they should follow the model of existing federal law, which promotes a state-federal partnership.
* Obama should reject proposals to require consumers to purchase insurance from private companies, as he did during the campaign. The individual mandate is highly unfair and unaffordable in practice.

Consumer Watchdog’s founder, Harvey Rosenfield, authored the landmark insurance reform initiative Proposition 103 in 1988, which has saved California drivers $62 billion over 20 years. Consumer Watchdog was also one of the earliest critics of HMO abuse and our advocacy led to strong HMO patients’ rights laws in more than 44 states. Visit our website — www.ConsumerWatchdog.org — for an extensive living library of the policy and politics of health care reform.

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