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LWV California Education Fund Nonpartisan Analysis of

Proposition 214

Health Care. Consumer Protection

Initiative Statute

The Question

Should additional requirements for the operation of health care businesses be established?

The Situation

During the 1980s, average health care spending in the United States grew by almost 11 percent annually. Since 1990, the rate of spending has been slowed to about 4 percent annually, partly because employers have contracted with health maintenance organizations (HMOs) to keep their insurance costs down. HMOs use methods such as reducing the number of days patients stay in the hospital, review of treatment plans, and financial incentives for doctors to hold down costs. About one-third of Californians belong to HMOs.

The Proposal

Proposition 214 would require health care businesses to:

physically examine a patient before denying payment for care and establish criteria for authorizing or denying payment for care.
disclose tax returns and other financial information, and report the outcome of legal proceedings brought against the business.

Proposition 214 would not allow insurers, health plans, and health care businesses to:

offer financial incentives to doctors and licensed caregivers to deny or delay medically appropriate care.
prevent doctors or licensed caregivers from disclosing relevant health care information to a patient.

Fiscal effect: According to the Legislative Analyst, Proposition 214 would result in costs to state and local governments in the range of tens of millions to hundreds of millions of dollars annually.

Supporters Say

health care businesses should be required to tell consumers if their insurance premiums are being spent on patient care or bureaucratic overhead and executive salaries.
medical decisions should be made by patients and their doctors, not by HMOs and insurance companies.

Opponents Say

health insurance costs would increase as much as 15%, costing taxpayers hundreds of millions of dollars.
this measure would not provide health coverage to the uninsured and medically indigent; real health care reform should make insurance more affordable and reduce the number of uninsured.

(Analysis prepared by the League of Women Voters of California Education Fund.)

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Last updated: October 20, 1996
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