Looking Ahead: Insurance Regulators Galore

While the U.S. Senate tries to merge the HELP and Finance measures and the House tries to blend the products of three committees (Ways and Means, Education and Labor, and Energy and Commerce), we have been looking at what we would need to do here in California to implement health reform if it is enacted at the federal level.

While the proposals differ in specifics, all of them have an important role for the states in continuing to regulate key aspects of health insurance as well as having either the option or the obligation to operate an “exchange” at the state level.

In particular, as we read the Senate Finance proposal, we were struck by the repeated reliance on the National Association of Insurance Commissioners (NAIC). California is unique in having two regulators for health insurance: the Insurance Commissioner and the Department of Managed Health Care. It is the Insurance Commissioner, currently Steve Poizner, who participates in NAIC, not the DMHC.

Yet most of health insurance in California is regulated by the Department of Managed Health Care. The numbers vary year by year but roughly out of the approximately 20 million Californians with private health insurance, about 80% have products regulated by DMHC and about 20% by DOI. For the 2-2.5 million who buy insurance as individuals, the split is closer: it is usually 60/40, with DMHC sometimes having the majority and other years DOI having the majority of covered lives.

As readers of this blog know from our fights to improve health insurance for those Californians who buy their own coverage, DOI products are much less comprehensive than DMHC products. Insurers regulated by DOI sell hospital-only coverage or coverage that covers three doctor visits, two days in the hospitals, and a few generic drugs and that counts as health insurance at DOI. Of course, the premiums are lower for such junk than for real insurance that actually covers basic health services.

In the real world of the politics of protecting consumers, what does it mean that California has two regulators? Well, it depends. When Pete Wilson was governor vetoing HMO consumer protections left and right, we were grateful to have Insurance Commissioner John Garamendi for four of those years. When Gray Davis signed the 21 bills that made up the HMO Patient Bill of Rights and created the Department of Managed Health Care, headed by Daniel Zingale, while Insurance Commissioner Chuck Quackenbush was taking questionable contributions from insurers, we thought more fondly of DMHC than DOI.

The two departments try to work together—and as would be expected, sometimes and on some issues that works better than other times and other issues.

If health reform is enacted at the national level, and we are doing everything in our power to make that happen, then implementation will occur under a new Governor and new Insurance Commissioner—so it is hard to say whether we will be happy or sad about the prospects for implementation. But what is certain is that winning health reform at the national level is only the first step in making sure that consumers are protected.

Health Access California promotes quality, affordable health care for all Californians.

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