Insurance Czar May Gain New Clout in California

One of the more powerful positions in California politics is also among its least known.

And it’s a position that, because of the new national health reform law, is about to become even more influential.

California voters will elect a new insurance commissioner in November. In last week’s primary election, Assembly member Dave Jones (D-Sacramento) won the Democratic race handily, while the Republican race between legal expert Brian FitzGerald and Assembly member Mike Villines (R-Clovis) is much closer, with some provisional and absentee ballots still to be counted.

Even without health care reform changes, the commissioner’s job could assume new power under a proposal by Jones. Jones’ bill (AB 2578) would give the commissioner authority to approve or reject insurers’ requests for premium increases. The Senate Health Committee will discuss the bill next week.

Power and Politics

The insurance commissioner contests during the primary generated barely a ripple in the fabric of California politics, said San Jose State University political science professor Terry Christensen.

“Obviously it hasn’t generated a lot of public interest, especially compared to the race for governor. It’s a relatively new post, that’s part of the reason no one’s heard of it,” Christensen said.

In 1988, California voters passed Proposition 103, giving broad enforcement powers to the Department of Insurance and significantly expanding the responsibilities and power of the insurance commissioner. The ballot proposition required some insurers — but not health insurers — for the first time to get state approval for insurance rate hikes. It forced a 20% rollback in some insurance rates at the time and was primarily targeted at excessive rates for car insurance.

Prop. 103 also made the commissioner’s job an elected rather than appointed position.

The state insurance commissioner now heads a department with a $210 million annual budget. The commissioner supervises 1,150 employees. That makes it one of the largest bureaucracies in the state. The department licenses, regulates and enforces laws dealing with property, casualty and health insurance. It doesn’t set rates, but it reviews and evaluates rate hikes.

Most recently, it responded to the Anthem Blue Cross rate proposal that galled so many Californians.  Anthem sought to raise annual policy rates for plans on the individual market by an average of 25% and up to 39% in some cases. According to Christensen, it was Insurance Commissioner Steve Poizner who helped convince Anthem to reconsider and then delay its plans. That kind of incident signifies a shift within the Department of Insurance, Christensen said.

“What’s changed now is health care and health insurance. With the mandate from the federal legislation, this will become a more and more important position,” Christensen said.

Pivotal Role in New Health Insurance Exchange

No matter who wins in November, one thing is certain: The new insurance commissioner will play a pivotal role monitoring how the new federal health care reform law is implemented.

“It’s one thing for Congress to pass a bill, but when it comes to implementation, good administration matters,” FitzGerald said. “Policy is made by legislators, but the insurance commissioner will be responsible for implementation.”

The Department of Insurance will be involved in how insurance companies cooperate with the state health insurance exchange to be set up in California. And it will need to clearly communicate and interpret all of the intricate details of health care reform as it pertains to health care insurance.

For FitzGerald, it comes down to one important word — enforcement. “We are going to be responsible for enforcing the new rules. Enforcement will have to come from the state. We’re the enforcer. It’s going to land up in our laps,” FitzGerald said.

For his part, Jones said the job of insurance commissioner is, at its root, designed to protect Californians. Jones has introduced a number of consumer-protection bills as a member of the Assembly, including several dealing with health care.

“Now more than ever,” Jones said, “Californians need an insurance commissioner who will stand up for consumers and hold the insurance industry accountable.”

Villines had a little different take when he first announced his candidacy. He wanted to make sure the Department of Insurance didn’t overstep its bounds.

“Our economy is very fragile today,” Villines said. “And having fair, affordable and reasonable regulation of our insurance industry is a large part of our state’s overall financial strength.”

Where the Election Is Going

The June 8 election had the lowest voter turnout in California history for a gubernatorial primary. Only 25.3% of registered voters actually came out to vote. The previous low was 33.6% in 2006.

That kind of voter apathy has political expert Christensen a little worried.

“The problem for these guys is that they’ll be overshadowed by the races for governor and Senate. It’s harder for the lower guys to be seen at all.”

Christensen was heartened by a recent Field Poll that showed a majority of Californians favor the new health care reform act. That, he said, should make the devil’s-in-the-details work of the insurance commissioner a bit easier.

“A lot of people are just confused by health care issues and national health care reform,” Christensen said. “So that level of support is significant.”

Christensen also pointed out that the insurance commissioner job has been a stepping stone of sorts for politicians with aspirations for higher office.

John Garamendi left as insurance commissioner to win elections for lieutenant governor and then Congress. Current commissioner Steve Poizner ran against Meg Whitman in the Republican primary for governor.

“It’s the proverbial bully pulpit,” Christensen said. “If the insurance commissioner is expressing an opinion, it will be reported.”

But this time around, given the added power this position is likely to wield in California, he said, maybe this insurance commissioner will be happy to stay put.

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