The role of California’s insurance commissioner will change quite a bit during the current term. It’s a job that oversees a huge agency, with 1,300 employees charged with evaluating, regulating and policing the home, car and other insurance industries in California. Its approach to health care insurers, though, historically has been different than its authority over other insurance industries. That is about to change and expand in several ways.
After Tuesday’s election, the new commissioner, Dave Jones, said he is “eager and excited” to oversee those changes.
“I’m looking forward to all of it,” Jones said. “I’m excited at the prospect of making this office the state’s most important consumer protection agency. And I’m excited at the prospect of playing a leadership role in implementing health care reform in California.”
The California Department of Insurance has authority to regulate rates in some areas — auto insurance, home owners insurance — but it does not have the authority to regulate health insurance rates. Jones, as a member of the Assembly this year (D-Sacramento), authored a bill (AB 2578) to give the insurance agency that authority, but it failed passage in the Senate.
“The insurance commission needs that kind of authority, to be able to reject excessive rate hikes,” Jones said, adding that he would work with members of the Legislature to revive that bill.
In the meantime, he said, regulation of health insurers could take a different tack: “At best what we hope for is the ability to aggregate those 4 to 6 million people in the [health benefit] exchange — and that will allow us to negotiate better prices from the insurance industry.”
Jones said the board overseeing the exchange will have direct responsibility for that task, “but the federal statute requires exchanges to consult with and take input from the state insurance commission. So I’m planning to take an active role in helping in creating and implementing the exchange,” Jones said.
“We need to develop systems to keep insurers from cherry-picking people who are healthy out of the exchange. So how we design the exchange can prevent that,” Jones said.
Jones pointed to moves by the industry that he said would deny coverage to children with pre-existing conditions, in advance of the national law that would prevent that.
“I’m not sure that an insurance company that refuses to insure children has a place in this state in selling insurance at all,” Jones said.
More directly, the Department of Insurance has enforcement power over several new health care rules, such as extension of dependent status to age 26, or the ban on unlawful rescission.
“There’s a wide range of elements here,” Jones said. “Federal law provides new authority in terms of rescission, coverage till age 26, medical loss ratios and so on.”
Jones emphasized that he will be involved in other types of insurance, as well.
“There’s a lot of work to be done with disability and workmen’s comp, for instance,” he said. But what’s new and unformed is the role of the insurance commissioner in health care reform.
Jones is especially interested in consulting on the design of the health insurance exchange. “How we do that,” Jones said, “will determine whether health care reform in California is successful or not.”
California has led the nation in implementing health care reform — from the many health care reform laws passed here, including creation of a benefits exchange and its board, as well as the restructuring of Medi-Cal through the federal Medicaid waiver. After Tuesday’s midterm election it’s possible some states could now could drag their heels over health care reform, given the wins by conservative Republicans, some of whom want to repeal the law.
Jones doesn’t believe it.
“There’s an awful lot of rhetoric coming out,” he said, “like filing lawsuits to challenge health care reform — while, meanwhile, civil servants are quietly going forward to implement that reform.”
States are due to get quite a bit of money from the federal government, which could help alleviate their health care costs, Jones said. “I’m not convinced states will pull out, and even if they drag their feet, we’re a big enough state with enough people that I’m convinced we can do this. After all, we were planning to do it by ourselves in 2005.”
One last thing, Jones said. The recent national debate over health care reform dollars sounds a lot like a previous federal plan, he said.
“Well, you know, there was a lot of hot air about the stimulus, too,” Jones said. “But boy, I can tell you, they were all there at the ribbon cuttings.”