Health Care Largest Lobbying Industry in CA in 2011; HMO Kaiser Tops List

Initiative Would Prohibit Insurers From Passing On Lobbying Costs To Consumers

SANTA MONICA, Calif., March 12, 2012 /PRNewswire-USNewswire/ -- Health care generated $35.7 million in lobbyist spending in 2011, more than any other industry in California, and Kaiser was the largest spender at $3.5 million, according to a California Healthline analysis of state records released today. A ballot initiative proposed by consumer advocates would prohibit insurance companies like Kaiser from passing on lobbying expenditures to policyholders as premium increases, the same way current law prohibits auto and homeowners insurers from passing on those costs.

"The increasing price patients pay for their health insurance premiums should not be used to fund insurance company lobbyists in Sacramento who work against patients' interests.  Premium dollars should go to medical care, not lobbyists, and our ballot initiative will make sure that happens," said Jamie Court, president of Consumer Watchdog and proponent of the Insurance Rate Public Justification and Accountability Act.

The ballot measure, proposed by Consumer Watchdog Campaign, would require health insurance companies to publicly justify rate hikes under penalty of perjury, and get approval for increases before they take effect. Regulators would have the power to prohibit health insurance companies from passing on the cost of lobbying to policyholders. The initiative would regulate health insurance policies sold to more than 5.3 million Californians.

The health insurance lobby, led by Kaiser, has prevented passage of legislation to regulate health insurance rates proposed in Sacramento for the last six years. The most recent iteration of the bill, AB 52 by Assembly members Feuer and Huffman, was blocked by insurance industry allies in the Senate last year, said Consumer Watchdog Campaign.

"The health insurance lobby has proven it will spend whatever is necessary in Sacramento to stop rate regulation from passing the legislature. But the insurance industry can't buy California voters. It's time to let the public decide if health insurance companies should have to rein in skyrocketing rate hikes," said Carmen Balber with Consumer Watchdog Campaign.

In a letter sent to former Kaiser medical executive and California Medical Association spokesman Dr. Paul Phinney last week, Consumer Watchdog Campaign outlined the excessive profit, surplus, and other spending Kaiser is trying to protect by opposing rate regulation.

The state's largest HMO, Kaiser:

  • Has imposed repeated double-digit rate increases on policyholders, including an 18.4% increase on 660,000 policyholders on Jan. 1, 2012
  • Holds bloated financial reserves of $12.8 billion, more than 1,100% of the state minimum.
  • Reported $5.6 billion in profit since 2009 and reaps income from $20 billion in investments.
  • Paid executive compensation totaling $25.8 million for its top 10 executives in 2010.
  • Provides first class travel for company executives, senior managers and their companions at company expense.
  • Reportedly pays membership fees for all Kaiser doctors that choose to join the CMA, an undisclosed but potentially lucrative source of income for the association.

Read the letter:

The ballot initiative would limit the amount of wasteful overhead, profit and executive compensation that insurance companies may pass on to consumers, and prohibits health, auto and home insurers from using Californians' credit history or prior insurance coverage to increase premiums or deny coverage.

The measure is based on the insurance reform law, Proposition 103, that regulated auto and homeowners insurance in California. That law has saved drivers $62 billion in premiums since 1988, according to a 2008 Consumer Federation of America report.

The campaign is using a mixed paid and volunteer effort to gather the 505,000 signatures necessary to qualify for the November ballot. U.S. Senator Dianne Feinstein, who was the first person to sign the petition, authored an email to millions of California voters asking them to download, print, sign and return the official ballot petition online at

Consumer Watchdog Campaign is chaired by insurance reform Proposition 103 author Harvey Rosenfield. Consumer Watchdog Campaign is the campaign affiliate of Consumer Watchdog, which was founded by Rosenfield and whose president, Jamie Court, an award-winning consumer advocate and author, is the proponent of the proposed ballot initiative.

SOURCE Consumer Watchdog Campaign