MANAGED CARE REFORM: Wilson’s HMO Agency Plan Is Rejected

      In a "strict party-line vote," the California Senate Thursday "rejected Governor Pete Wilson's plan to create a new state agency to regulate managed care plans." Twenty-two Democrats voted against the plan, which would have transferred the state Department of Corporation's regulatory oversight of HMOs to a newly formed Department of Managed Health Care; 15 Republicans backed the proposal. Wilson's plan also called for a gubernatorial-appointed commissioner to head the new HMO department (Russell, San Francisco Chronicle, 7/3). Under the "administrative umbrella" of the state Business, Transportation and Housing Agency that includes the Department of Corporations, the new department "would have been given beefed-up regulatory powers," the Los Angeles Times reports (Ingram/Vanzi, 7/3).

'Too Little, Too Late'
      The Sacramento Bee reports that the "Senate's majority Democrats sharply criticized Wilson's plan," saying the new department "wouldn't be responsive to consumers" and shouldn't be under the auspices of the business agency. "We need a new lead agency. ... This governor has simply offered too little, too late," said state Sen. Herschel Rosenthal (D-Los Angeles), "who authored the resolution that rejected the plan." Rosenthal further said, "The current, lame-duck governor should not be the architect for the next administration's framework for regulating HMOs. ... The governor's plan is fatally flawed." But Ron Low, Wilson's spokesperson, said, "The Democrats have been running around for months saying there needs to be serious HMO reform in California. When they have an opportunity to pass real reforms to protect consumers, what do they do? They reject it" (Matthews, 7/3). Democrats want a new HMO agency to be "under either the Health and Welfare Agency or the Consumer Services Agency." But state Sen. Ray Haynes (R-Temecula) "said putting HMO regulation in the Health and Welfare Agency would make the current 'regulatory morass' even worse by giving more authority to 'health care bureaucrats,' while the Business and Transportation Agency understands private enterprise" (AP/Contra Costa Times, 7/3).

Consumer Concerns
      Consumer advocates praised the Senate's rejection, calling it a victory for consumer rights. The San Francisco Chronicle reports that "HMO gadfly" Jamie Court of Consumers for Quality Care said the failed plan "amounted to buying a new nameplate for the same ineffective agency" (7/3). "Consumers of this state will not settle for cosmetic surgery on the HMO oversight system which needs radical reconstruction. The HMO oversight system must be accountable to the public, not the HMOs," he said (Consumers for Quality Care release, 7/2). Both Health Access California and the state's Little Hoover Commission studied Wilson's plan and rejected it. In grading the plan, HAC gave it passing grades in creating a separate HMO regulator and maintaining HMOs' fiscal solvency, but failed the plan in a number of consumer protection areas. Bruce Livingston, executive director of HAC, said: "The governor's reorganization plan shuffles boxes on an organizational chart but adds no new help for consumers who can't get health care from their HMO" (HAC release, 7/1). The Little Hoover Commission rejected the plan because of concerns that it did not consolidate the state's HMO oversight into the new department. The commissioners also believed a board would better govern the new agency rather than one appointed person (release, 6/25).