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Mercury Insurance sells Proposition 17 as benefiting consumers, but it’s easy to see through the claim. Look at who’s opposing the proposition and who’s backing it. Serious consumer protection groups such as Consumers Union and Consumer Watchdog are absolutely against Proposition 17. So is U.S. Rep. John Garamendi, the former insurance commissioner, who is a longtime advocate of insurance customers’ rights.

The competition is on this year to see which company — Mercury Insurance or PG&E — is responsible for the worst abuse of California’s initiative process. PG&E’s $28 million assault on potential competition through Proposition 16 will be tough to top, but Mercury Insurance is doing its best. It’s pumping $3.5 million into the campaign to convince voters that Proposition 17’s change in insurance regulation is in their best interests. Don’t believe it. This is yet another in a long line of direct attacks on Proposition 103, which California voters passed in 1988 to rein in abuses of the insurance industry. It professes to be in consumers’ interest, but it is anything but. Vote no in the June 8 election.

Using April Fool’s Day to its full political advantage, the Consumer Watchdog-funded StopProp17.org (a Campaign for Consumer Rights effort) has launched a clever, tongue-in-cheek video to mock the premise and talking points of the Mercury auto insurer’s ballot initiative.

California voters are about to be bombarded by more than $50 million in political advertising designed to convince them to approve a pair of measures desperately sought by two powerful corporations with a long history of lies and political corruption.

More than $3.51 million of Cal-FAIR’s $3.58 million campaign war chest came from insurance giant Mercury General Corp. Consumer Watchdog founder Harvey Rosenfield, one of the ballot-pamphlet argument co-authors named in the suit, said he looks forward to seeing Mercury in court. “For months, Mercury has been lying to the public, to state officials and to the news media about its June ballot initiative,” he said. “Indeed, for more than 10 years, the Department of Insurance and the courts have repeatedly concluded that Mercury’s proposal would create a new rating factor — the consideration of prior insurance history — that is currently illegal.” “The fact is that today, under current law, if you stop driving you won’t pay more when you restart your insurance coverage,” Rosenfield continued. “If Mercury’s Prop. 17 passes, insurance companies will be allowed to charge a lot more to good drivers who didn’t need insurance when they weren’t driving, or who missed a single payment, or who chose to fore-go coverage because of the economy or illness.”

Even as the health insurance giant turns over hundreds of millions in profits to its parent company, it defends plans to raise rates for Californians whose care last year exceeded premiums paid.

But not all the profits went to the corporate parent. Anthem has accumulated more than $1 billion in cash -- in excess of what regulators require the company to reserve to cover outstanding claims, The Times found. And, between 2005 and 2007, Anthem made annual payments of more than $2 billion a year to affiliated companies for unspecified services, according to an analysis of regulatory filings by Consumer Watchdog. The Santa Monica-based advocacy group has urged regulators to investigate the transfers.

The planned spike in health insurance rates by Anthem Blue Cross in California is just the tip of a Titanic-size iceberg of exorbitant price increases, secret pricing and consolidation not only by insurers - but by the hospitals, doctors and medical device-makers that send the bills to the insurers. Insurers blame hospitals and doctors, doctors blame insurers, and hospitals blame doctors and medical device-makers in what academics call an inscrutable medical-industrial complex that rivals anything the defense industry ever invented. All these groups are combining into what many experts describe as cartels. Jerry Flanagan, health care policy director for Consumer Watchdog in Santa Monica, said the heath care system is "in a tug-of-war between warring tribes... over who has market dominance over price." Flanagan doesn't think the insurance industry is losing the battle. Consumers have almost no control over costs, no ability to shop and little incentive to do so because most patients neither buy their own insurance nor pay their medical bills directly. But they foot the bill in skyrocketing premiums, deductibles and co-pays.

A high-profile California insurance company that is backing a controversial insurance measure on the June ballot has engaged in practices that may be illegal, including deceptive pricing and discrimination against consumers such as active members of the military and drivers of emergency vehicles, according to a state report obtained by The Chronicle.

Should someone in Idaho or Nevada have significantly different health care coverage from someone in Massachusetts? That, essentially, is one of the biggest questions Congress will be wrestling with as it tries to meld House and Senate bills into a single law to revamp the nation’s health care system. Even some consumer advocates agree that the states should continue to serve as insurance regulators, even if the federal government sets the ground rules. “You always want the states to be the first responder,” said Jerry Flanagan, a health care advocate for Consumer Watchdog in California.

LOS ANGELES, CA -- A California appeals court upheld changes to state insurance regulations that clarified that insurers must pay the cost of challenges to rates deemed excessive. The appellate panel rejected a challenge from the Association of California Insurance Companies and others. Hoping to discourage consumers from challenging rate applications, insurance companies argued that they were not required to pay the legal costs if they withdrew or settled challenges to rate applications before a formal hearing on their application was called, Pam Pressley, Consumer Watchdog's litigation director, said in a statement.  The revised regulation stemmed from a 2005 court case that said a consumer group was not entitled to reimbursement because there was no hearing, Sorich said.

Consumer groups that successfully challenge insurance rate increases can recoup their legal fees from the insurers, even when the companies drop their requests or agree to a compromise, a state appeals court has ruled.  The author of the ballot measure said the ruling was an important victory for consumer advocates and would encourage them to hire experts who could take on insurance company witnesses. "The insurance industry was attempting to escape accountability when they ask for permission to raise rates," Harvey Rosenfield, founder of an organization called Consumer Watchdog, said Monday. "If they can prevent consumer groups from scrutinizing rates, they're more able to overcharge."

The state's stem cell institute this week tripled the salary of one of its vice chairmen, former state Democratic Party chief Art Torres. Torres previously received $75,000 a year to work half time as vice chairman. The board of the California Institute for Regenerative Medicine voted Thursday to bump that up to $225,000 for 80 percent of his time.

With lawmakers close to passing a health care overhaul plan, the issue of regulating workplace benefits remains vital because the proposals preserve the current employer-provided system without added legal remedies to patients. Jamie Court, president of Santa Monica-based Consumer Watchdog, said advocacy groups like his plan to push ERISA reform if health reform includes an insurance mandate. "Once you tell Americans they have to contribute toward a policy, then the government has an absolute duty to ensure the policy is worth the paper its written on," Court said.

Opening the door for insurers to sell policies across state lines could allow health plans to avoid tougher requirements in places like California.

Healthcare overhaul bills working their way through Congress could jeopardize laws in California and other states that require insurers to pay for treatments such as AIDS testing, second surgical opinions and reconstructive surgery for breast cancer patients.

SACRAMENTO, CA -- As he campaigns to become California's next governor, Republican Steve Poizner often proclaims that auto and homeowner insurance rates have fallen by $1.81 billion since he took over the state's Department of Insurance in January 2007. But one consumer group, which compiled statistics at the request of the Mercury News, argues that nearly half those reductions were the work of Poizner's predecessor, Democrat John Garamendi.

Studies of Tough Regs in California Show Strong Benefit for Both Consumers and Casualty Insurers in Stable Market
 
Santa Monica, CA -- The defeat of the so-called public insurance option in the Senate Finance Committee’s version of health reform makes regulation of insurance premiums and copays even more critical, said Consumer Watchdog. If Americans are forced to buy private insurance policies under national health reform and nothing is done to regulate the prices of policies, consumers will remain trapped in a rising cost spiral enabled by insurers. Rate regulation is far from radical and is also good for the insurance industry, said the nonprofit, nonpartisan advocacy group.

The healthcare bills in Congress do not call for limits on prices, raising fears that costs will continue to grow.

WASHINGTON, D.C. -- In the drive to bring health coverage to almost every American, lawmakers have largely rejected restrictions on how much insurers can charge, sparking fears that consumers will continue to face the skyrocketing premium increases of recent years. nThe legislators' reluctance to control premium costs comes despite the fact that they intend to require virtually all Americans to get health insurance, an unprecedented mandate -- long sought by insurance companies -- that would mark the first time the federal government has compelled consumers to buy a single industry's product, effectively creating a captive market. "If the government is going to require people to buy an insurance policy, they have to guarantee it is affordable," said Jamie Court, president of Consumer Watchdog. "It is unconscionable not to."

In a state parched by a three-year drought, wildfires are at least partly to blame for the price increases, industry officials and even some consumer advocates agree.

The dramatic images of firestorms now sweeping through the San Gabriel Mountains produce fear and dread "but don't make for any actuarial implication," said Douglas Heller, executive director of Consumer Watchdog, a Santa Monica group. "We're talking about not even 1% of homes."

Job sharing came to the state stem cell institute yesterday when its board appointed two people to the post of vice chairman: San Diego biotechnology veteran Duane Roth and Art Torres, a former state senator and outgoing chairman of the Democratic Party. “I think the concept of this is a little bizarre and is all about trying to curry favor with the different political factions in the state,” said John Simpson, of the nonprofit Consumer Watchdog in Santa Monica. “It's not clear to me how it will bring any benefit or focus to the organization itself.”

Insurance industry critic Harvey Rosenfield, author of Proposition 103, questioned some of what Poizner is doing. "The tentative changes I've seen would let the insurance companies estimate their future losses and also let them choose which years to include as the basis for that," he said. "It's basically deregulation."