Poizner urges one regulator over managed health care industry

Insurance Commissioner Steve Poizner says authority over the state's sprawling health care insurance industry should be put under one regulator, instead of having dual chiefs with responsibility over separate turf.

"I absolutely support combining the two," Poizner told a gathering of the California Medical Association on Tuesday. "We should have unified regulation over all health insurance." Poizner stopped short of saying his office should be that sole regulator, but that was suggested by his remarks.

Discussions over changing the way California's health care insurance industry is regulated are increasing in the Capitol. Thus far, however, there is no legislation that would make that change, although the issue is heating up as new cases come to light of patients having problems with their HMOs.

Poizner is the state's single most powerful regulator. His office, with 1,300 employees and a $200 million budget, regulates most of California's insurance industry, including some 1,500 companies and about 340,000 agents. The department has the power to seize financially unstable insurers, sell off their assets and investigate fraud. The department has broad authority to advise insurers on their rates, setting benchmarks for what they can charge the public-which have a direct pocketbook impact on consumers. The department also advises workers compensation insurance companies how much they can charge employers for coverage.

The department also regulates so-called preferred provider organizations, or PPOs, a form of managed health care in which the providers of medical care–such as doctors, clinics and hospitals–contract with an insurer to provide care to a group's members.

PPOs comprise nearly a third of the managed health care industry.

Most of the rest, including HMOs, comes under the authority of a different state regulator, the Department of Managed Health Care.

Poizner noted that California, unlike the 49 other states, has dual regulatory schemes. He said he has set up a managed health care focus group in the department to consider issues related to managed health care. He said that health care insurance had not been a top priority at the department in the past, but said now that "the Department of Insurance has to step up here."

The DMHC, once part of the state corporations regulatory system, was removed from that jurisdiction several years ago and placed in the Business, Transportation and Housing agency. The DMHC is run by an appointee of the governor.

The Insurance Department is headed by a constitutional officer elected by voters statewide. The commissioner, like the head of  the DMHC, was once an appointed position, but that was changed by voters' 1988 approval of Proposition 103, which required the insurance commissioner to be popularly elected. The first elected commissioner, John Garamendi, took office in 1990.

Want to see more stories like this? Sign up for The Roundup, the free daily newsletter about California politics from the editors of Capitol Weekly. Stay up to date on the news you need to know.

Sign up below, then look for a confirmation email in your inbox.


Support for Capitol Weekly is Provided by: