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May 04, 2004 - 04:00 PM

A Voice for HMOs

by Jerry Flanagan
 
HMOs were not supposed to have any more clout in the Capitol than patients if you believe Arnold's campaign promises. But testimony by the Gov's newly appointed HMO regulator tomorrow could again show that those pledges have been forgotten.

Capitol insiders tell us that the Governor is sending the Department of Managed Health Care's new director Cindy Ehnes - yet unconfirmed by the Senate - to oppose health insurance premium oversight in tomorrow's Senate Insurance Committee.

Premiums are going up 30% and more Californians than ever before can't afford basic health care.

The legislation in Arnold's crosshairs, SB 1349 by Senator Ortiz, would help to weed out health insurer waste and profiteering that is propelling premiums even higher by providing similar oversight in place for auto insurance since voters enacted Prop 103 in 1988. Under the plan, health insurers would have to justify their swelling administrative costs, overhead, profits, surpluses and executive salaries before mailing out rate increases. Now that businesses are required to provide health care starting in 2006 as result of last year's SB 2 (Burton), controlling health care costs is more important than ever.

Why would Arnold send his new HMO regulator to oppose regulation and risk annoying the very Senators that will be asked to confirm her?

Well, there is the $46,200 Arnold received from the HMO Health Net whose former lobbyist, Patricia Clarey, is now the Gov's Chief of Staff. Three other insurers reported an additional $260,000 in contributions. Clarey received over $300,000 in cash and stock options from Health Net in 2003.

Or maybe its because Arnold sees the HMO lobbyists far more often than the patients who pay too much for their health care. The insurers spent $1 million of our health care premiums in the first 90 days of '04 lobbying the governor and legislators. (Read the April 5 ArnoldWatch about Pat Parker who still hasn't got a call from the Gov at http://arnoldwatch.org/blogs/blogs_000267.php3).

But shouldn't the HMOs have to explain their premium increases to the Insurance Commissioner just like auto insurers do? New federal data by the Bush Administration shows that health insurance overhead (salaries, profit, advertising, etc.) is the fastest growing component of health care spending. In fact, premiums are increasing two-and-a-half times faster than other cost drivers like hospital fees and doctors' charges. If premiums are justified, what's the trouble of having the Insurance Commissioner take another look?

Tomorrow's Senate showdown is key moment in state health care policy. Too bad Schwarzenegger may have already tipped the fight in favor of HMOs and against the state's 35 million patients.




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