Vetoes Allow Profits To Trump Patient Care, Family Physicians Say - Governor Vetoes SB 1440 And AB 1945, California

Main Category: Public Health
Also Included In: Health Insurance / Medical Insurance;  Primary Care / General Practice
Article Date: 02 Oct 2008 - 9:00 PDT

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Family physicians today said Californians' health care is seriously compromised by Governor Schwarzenegger's veto of a bill that would have mandated more money spent on health care and another that would have made it more difficult for health plans and insurers to refuse to pay for care.

"These two bills would have protected patients' care while Californians wait for our elected leaders to pass much needed, large scale health care reform," said Jeffrey Luther, MD, president of the 7,000-member California Academy of Family Physicians. "The Governor said in his veto messages he's waiting for comprehensive health care reform. Actually, we're all waiting for it, but meanwhile we need to protect patients because - given the lack of key agreements in Sacramento - important changes are not likely anytime soon."

SB 1440: Guaranteeing patients' health care premiums are actually spent on health care

Senate Bill 1440 (Kuehl - D-Los Angeles), sponsored by the California Academy of Family Physicians, would have guaranteed that a minimum level of patients' health insurance premiums were spent on their health care rather than on health insurance company profits and administration. The bill required that at least 85% of the dues and fees health plans received from their patients be spent on delivering health care services.

"This bill was designed to protect our patients' economic interests as well as their health interests," Luther said. "With health insurance premiums more expensive than ever, we want to be sure our patients are getting the services for which they're paying."

Current state law requires only that no more than 15% of such fees be spent on administrative costs such as marketing and executives' salaries. Health plans interpret this law to mean that profits can be taken from the remaining 85% of funds, Luther said. SB 1440 would have specified that the full 85% of health plans' income from enrollees be dedicated to their care; profits would have to be found elsewhere.

A recent survey by the California Medical Association showed that an additional $1 billion would be available each year for patient care if the 12 health plans in California that reported spending below the 85% mark were to meet the higher target.

AB 1945: Protecting patients from illegal cancellations of health care coverage

"This bill would have made it illegal for health plans and insurance companies to cancel patients' health insurance simply to avoid paying expensive medical bills," Luther said. Health plans and insurance companies in California were fined millions of dollars in 2008 alone for improperly refusing to pay for their own patients' health care, he pointed out. "People pay their premiums for years but then when they need care, their coverage is cancelled and they're hit with massive bills," Luther said.

Assembly Bill 1945 (De La Torre, D-South Gate), supported by the California Academy of Family Physicians, would have required all plans and insurers to complete medical underwriting prior to issuing a health care service plan contract or health insurance policy. Cancellations could not take place without advance review and permission from the Department of Managed Health Care or the Department of Insurance and would be limited by specific guidelines. The bill also would have required the development and use of standard information and health history questions on application forms.

"Far too often healthcare insurers seem to be putting the health of profits above the health of patients," Luther said. "Unfortunately, the vetoes of SB 1440 and AB 1945 allow this misplaced priority to stand."

About the California Academy of Family Physicians

With more than 7,000 members, including active practicing family physicians, residents in family medicine, and medical students interested in the specialty, CAFP is the largest primary care medical society in California, Family physicians are trained to treat an entire family's medical needs, addressing the whole spectrum of life's medical challenges. FPs serve a broad base of patients in urban, suburban and rural areas, often in California's most underserved areas.

California Academy of Family Physicians