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Proposition 33 opponents ready to take on health insurers

November 07, 2012
  • Mercury General Corp. Chairman George Joseph spent $16.9 million of his own money on a failed effort to pass Proposition 33, an auto insurance initiative.
Mercury General Corp. Chairman George Joseph spent $16.9 million of his… (Wally Skalij / Los Angeles…)

SACRAMENTO -- The consumer activists that defeated the Proposition 33 auto insurance initiative, despite their small budget, are crowing over their victory and spoiling for a new fight.

This tiime, it's with the health insurance industry.

Consumer Watchdog of Santa Monica is winding up its own initiative on the 2014 ballot to regulate health insurance rates in much the same way the state oversees auto insurance premiums under California's landmark Proposition 103 law of 1988.

"Last night's populist victory against the head of California's fourth-largest insurance company means we can beat big insurance companies when we have the truth and the public on our side," said Jamie Court of Consumer Watchdog's political campaign affiliate. Court's bragging came in an e-mail soliciting contributions for the 2014 initiative battle.

Proposition 33, bankrolled with $17 million in personal funds by Mercury General Corp. Chairman George Joseph, lost by a 9.2 percentage point margin.

The measure would have allowed insurers such as Mercury to give low-risk drivers a new discount when they switch companies. Proposition 33, Joseph argued, would potentially lower rates for the 85% of California drivers who comply with the state's mandatory auto insurance law.

Over the last 12 years, Joseph has tried in the state Legislature and courts to change Proposition 103 to allow for the discount. Most recently Mercury backed a 2010 initiative, similar to Proposition 33, that also failed at the polls.

Consumer Watchdog and allies, including Consumers Union, the publishers of Consumer Reports magazine, denounced Proposition 33 as a cynical maneuver by billionaire Joseph to mainly help one firm.

The organization argued the measure could unfairly raise rates for newly insured drivers and people who had been previously uninsured for a variety of reasons, such as not owning a car.

Joseph could not be reached for comment on the defeat. However, spokesman Terry McHale said the campaign was disappointed with the loss."We are proud of the initiative," he said. "We absolutely believe it would have been good for California consumers. It would have created a more robust auto insurance market and allowed people to get car insurance at a cheaper price."

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