Harvey Rosenfield, founder of Consumer Watchdog, speaking in 2000. (Rich Pedroncelli / Associated…)
This post has been updated. See below.
It takes a certain amount of chutzpah to name a group that opposes government oversight of health insurance premiums "Californians Against Higher Healthcare Costs." Especially when the group includes the trade associations for doctors and hospitals, two sets of Californians who've contributed mightily to the high cost of healthcare.
But it takes at least twice that amount of nerve, plus no small amount of irony, for the group to put out a press release accusing the other side of being funded by "special interests that will directly benefit from its passage." That's what the CAHHC did Tuesday when it blasted Consumer Watchdog -- the driving force behind an initiative to bring rate regulation to health insurance -- for raising most of the money for its signature drive from Consumer Watchdog's staff and "trial lawyers."
No matter what you think about the merits of rate regulation, you've gotta admit that this kind of attack smacks of the pot bad-mouthing the kettle.
Just about every initiative presents a battle between special interests. After all, each union, trade association, advocacy group or other set of people organized around a cause is inherently a "special interest," and it's these organizations that are the most active forces in politics. The question for voters is whether a proposed initiative would be good for the public as much or more than it would be good for its backers.
Granted, sometimes initiatives are so self-serving, that fact alone turns off voters. Consider, for example, the unexpected defeats in 2010 of Proposition 16, which was billed as a taxpayer-protection measure but really was PG&E's attempt to stop local governments from getting into the energy business, and Proposition 17, which was supposedly about competition in car insurance but really was Mercury Insurance's effort to promote its business model.
That's the reaction the CAHHC was trying to provoke Tuesday. The group argues that the initiative wouldn't help consumers because it wouldn't do anything about the cost of medical treatments, which are the main factor in insurance premiums. But Consumer Watchdog would benefit, the CAHHC alleges, because it could collect money from insurers if it successfully challenged a proposed rate. And according to the CAHHC, Consumer Watchdog and trial lawyers have contributed 87% of the money behind the initiative.
Never mind that the CAHHC's members include health insurers, whose interests aren't exactly aligned with consumers on this issue. Or that the doctors, hospitals and other healthcare providers in the group oppose the proposed initiative because they believe it could cut the fees they collect from insurers and their customers -- who would be, not to put too fine a point on it, you.
Doug Heller of Consumer Watchdog said his organization has put up about two-thirds of the money and that law firms (not necessarily trial lawyers) have kicked in about 19%. The bulk of the rest has come from businesspeople and unions, Heller said, with small contributors rounding out the fundraising.
It should come as no surprise that the consumer advocacy group would be the prime donor. Its founder, Harvey Rosenfield, was the author of Proposition 103, the 1988 initiative that empowered the state Department of Insurance to regulate premiums for auto, property and casualty coverage. The new initiative would extend Proposition 103 to health insurance policies.
Here is where Consumer Watchdog's financial interests come in. As in Proposition 103, the initiative would give third parties the right to intervene in rate proceedings, offering testimony from their own stable of experts to challenge the data and assumptions underlying a health insurer's proposed premiums. If the intervening party represents consumers' interests and makes a substantial contribution to the proceeding, it can collect "reasonable advocacy and witness fees and expenses" from the insurance company.
Over the last decade, Consumer Watchdog has intervened in numerous proposed rate increases, prevailing in many of them. Jamie Court, the group's president, said those activities have generated about $2.5 million for the group over the last decade while cutting premiums by more than $2 billion. Those would be premiums paid by (ahem) consumers.
Opponents of the initiative are spending a lot of time and, no doubt, a fair amount of money trying to make Consumer Watchdog the issue. In addition to the CAHHC's efforts, a site called ConsumerWatchdogWatch sprang up this year to attack the group (as a secretive front for "special interests") and Proposition 103. The site is sponsored by Forza Communications, a Sacramento firm run by Steven Maviglio, but Maviglio has declined to say who's funding the effort. Evidently, Maviglio shares the CAHHC's tin ear for irony.
[Updated, 5:19 p.m. April 17: Maviglio responded with an email, as follows: