The New America Foundation released a report this week that tackles everything from sugary drinks to medical malpractice in suggesting how the state could save $300 billion on health care over the next decade.
Insurance Commissioner Steve Poizner
There were no signs that the nonpartisan group was attempting to wade into the race for the next governor.
But their report points out that the agency operated by gubernatorial candidate Steve Poizner is the state's weaker health insurance regulator. The Department of Insurance is so inferior, the report suggests, that its health insurance responsibilities should be picked up by the Department of Managed Health Care, which now primarily oversees HMOs.
Note in the update below that Poizner agrees that health insurance should be regulated by one state agency. However, he points out that he has been particularly aggressive in dealing with insurers that seek to improperly cancel patients' policies and in fending off Anthem's proposed 39 percent rate hike.
The report is careful to take the long view of how the Department of Managed Health Care emerged as the state's scrappier watchdog than the Department of Insurance: “These two regulatory agencies are the product of changing political circumstances and marketplace trends during the past half-century,” the report says.
But it pulls no punches: The DMHC should take over the functions of the DOI, the report says.
It characterizes Poizner’s agency as one that allows insurers to offer “lower value products with fewer regulations” compared to the DMHC’s “higher value products with strong consumer regulations.”
(Perhaps this explains why Wellpoint turned to Poizner's team for the go-ahead for a 39 percent rate hike? To their credit, the Department of Insurance found an error with the request that led to its withdrawal.)
The report continues:
Therefore, these agencies should be merged, standardizing their regulations so that all consumers of healthcare in Californiacan be equally and fairly protected. This also may be a precondition for implementation of federal healthcare reform, which will require efficient coordination and policy implementation at the state level.
The best plan would be for Californiato transfer the CDI’s regulatory authority of health insurance to the Department of Managed Healthcare. Insurance companies then would be licensed under DMHC, which might need to provide these services through a subsidiary organization. Having all health insurance regulation under the DMHC likely would lead to equalized benefits and uniformity in administrative and quality-of-care programs, claims practices, and regulations regarding financial solvency.
The thrust of the suggestion, again, appears to dodge and weave around politics. Rather, the authors point out that a standardized health insurance regulation system would be better for creating a functional business climate that is better for consumers:
Standardizing regulations, including benefit mandates,across all insurance products would remove the incentivethat is pushing insurers away from products that offercoordinated care and toward low-cost, low-quality options.
In this way, the state would be protecting all consumers, not just those in managed care. This also would create alevel playing field for value-based competition.
UPDATE: Department of Insurance press secretary Darrel Ng offered this response Friday:
Commissioner Poizner agrees that there should be a single regulator of health plans and health insurance and has supported this idea for a number of years. California is unique among states with its bifurcated regulation of health care.
Under Commissioner Poizner's leadership, the Department of Insurance has significantly reduced the number of health insurance rescissions in the past year via settlements with the largest insurers and new regulations, with at least one health insurer reporting zero rescissions. Compare that to nearly 4,000 that we found by all health insurers during the middle of this decade.
Commissioner Poizner also took the unprecedented step of ordering an independent actuarial review of Anthem's recent rate hikes. This review found mathematical errors that ultimately led to Anthem withdrawing its filing. California was also the only state able to find errors in Anthem's filings.
While the system of dual regulators may fundamentally be in need of reform, Commissioner Poizner and the Department of Insurance has worked through the system to fiercely provide top notch consumer protection during his tenure.
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