MANAGED CARE REFORM: Davis Signs Sweeping Legislation

      Gov. Gray Davis (D) signed a "comprehensive package of health care reform bills yesterday," most notably granting patients the right to sue their HMOs for punitive damages and to seek second medical opinions, the New York Times reports. In addition, the legislation, which takes effect in 2001, requires HMOs to include contraception as part of prescription drug benefits, and cover breast exams, breast cancer treatment and "serious" mental illnesses. It also establishes a new Department of Managed Care to oversee the industry as the changes are implemented (Sterngold, 9/28). "It's time to make the health of the patient the bottom line with California HMOs," Davis said at Monday's signing ceremony, which was attended by doctors, consumer advocates, health insurers and lawmakers (Gledhill, San Francisco Chronicle, 9/28). Overall, Davis signed 21 bills into law, but failed to act on two major measures -- "one improving the nurse-to-patient ratio in hospitals, and another requiring that all health care decisions at HMOs be made by California-licensed physicians." He did not indicate his final intentions for those bills, the Sacramento Bee reports (Capps, 9/28).

Cheers and Jeers
      The new laws evoked a flurry of responses from lawmakers and health care providers, among others. Many commended the legislation, calling it "historic" and a victory for patients' rights. "This is a shot across the bow of the HMO industry," said Jamie Court, advocacy director for Citizens for Quality Care (Appleby, USA Today, 9/28). He added that the new laws force HMOs to give better care by "even[ing] the gravest imbalances of power between HMOS and their patients." State Sen. Liz Figueroa (D-Fremont) said, "In California, HMOs have been exempt from responsibility for long enough and it shows in their conduct. It's time they were treated like everybody else" (Bee, 9/28). State Rep. Carole Midgen (D-San Francisco) agreed, saying, "This is going to bring real reform and relief to consumers" (Chronicle, 9/28). The mental health parity bill drew particular praise from advocates (New York Times, 9/28). The bill "acknowledges that mental illnesses are real, diagnosable and treatable," said Michael Faezna, president and CEO of the National Mental Health Association, noting that "[m]ental health parity is about fairness and an end to unjustified discrimination in health insurance" (NMHA Release, 9/27). State Rep. Helen Thomson (D- Davis), sponsor of the mental health bill, added, "Gov. Davis showed great leadership today ... he has ensured that thousands of California families will not go broke providing medical treatment for their severely mentally ill loved ones" (Ainsworth, San Diego Union-Tribune, 9/28).
      Some health advocates, however, gave only a lukewarm reception to the legislation, claiming that Davis forced the "Democrat- controlled Legislature [to] scale back the original reform plan." Sara Nichols, lobbyist for Neighbor to Neighbor, said, "These are extremely limited remedies that are quite complicated to use." Others expressed concern that the reforms "fail to address" California's seven million uninsured residents. "Now that we've got these reforms, we need to work on getting coverage for more people," said Betsy Imholz, director of Consumers Union West Coast. Reform advocates also noted that the "laws protect only those people in plans regulated by state law," leaving about two million Californians unaffected.
      Industry officials warned that "the reform package includes proposals which [they] fear may produce more in the way of higher costs than benefits to consumers." Walter Zelman, president of the California Association of Health Plans, said that the mental health stipulation may add the "highest cost" (Ainsworth, San Diego Union Tribune, 9/28). American Association of Health Plans President Karen Ignagni added that while "much of the package [is] good legislation ... the provision for lawsuits ... [is] expensive and unnecessary" (New York Times, 9/28).

The Great Reconciler
      In a San Jose Mercury News op-ed, Davis defends the legislation, writing that the package serves to "reconcile" the "competing concerns" of consumer health advocates and plan administrators, and is "the strongest package of managed health care reforms enacted this year." Noting that Californians "have been experiencing a crisis of faith in the continued ability of their plans to provide them with affordable, accessible, quality health care," he says the reforms "protect both patients and providers, and represent a move to renew public confidence in a "health care system that has become badly torn and frayed" (9/28).

Cause and Effect
      Health policy analysts asserted that Davis' approval of the legislation would spur action in Congress, where a slew of other health care reform proposals are currently languishing. "As the birthplace of managed care and the biggest state in the country, it's a big deal when California acts because it instantly becomes a bellwether for the nation," said Larry Leavitt, a senior health policy analyst at the Kaiser Family Foundation. "That's particularly true because the fight here was fairly contentious," he added (Ingram/Marquis/Rubin, Los Angeles Times, 9/28).