Should California stop having two health insurance regulators?

The two-headed beast that regulates health insurance in California is under fire.

For the first time in a decade, healthcare leaders in Sacramento are publicly asking whether it’s time to junk overlapping bureaucracies that police health insurers and HMOs.

Some suggest that a single agency would be better equipped to serve the public and tackle a maze of new healthcare rules from the federal government. Others say such a move would distract from more pressing issues facing lawmakers and regulators.

The existing system — with an elected insurance commissioner and a separate agency under Gov. Jerry Brown — has confused consumers, has driven up costs and now threatens to undercut the state’s ability to implement federal healthcare reforms, several experts say.

The problems with the divided approach were on display Thursday in Sacramento, where healthcare advocates, insurance industry representatives and regulators debated the merits of blending the Department of Insurance and the Department of Managed Health Care. Together, the two agencies regulate health coverage for more than 24 million Californians.

Combining them would alter a decades-old system that has placed authority over traditional health insurers in the hands of the insurance commissioner and left oversight of HMOs to other departments.

The two regulators enforce different sets of laws and require insurers to provide varying levels of health benefits for consumers. They also are seen as widely different in their dealings with insurers and in their enforcement powers.

Such distinctions might seem like bureaucratic minutiae, but the question of who is in charge will loom large in the years to come. The state must grapple with how best to broaden access to health insurance and medical care under the federal healthcare law already starting to take effect.

“At the end of the day, we want a consolidation that takes the best of both,” Anthony Wright, executive director of Sacramento-based Health Access California, said at Thursday’s panel discussion. “It doesn’t make sense for consumers to have two regulators.”

Both regulators said they were open to the idea, but there were no commitments.

“Consolidation could have significant advantages,” said Maureen McKennan, an acting deputy director of the managed healthcare department that reports to the governor. “It should be easier for consumers to understand coverage choices, how to access care and navigate the healthcare system.”

Gov. Brown has not taken a position on the issue, and his office did not return phone calls.

Deputy Insurance Commissioner Janice Rocco echoed McKennan’s sentiment but said Thursday’s event was only the first step in a public conversation about who will regulate insurers and HMOs in California.

“This is the beginning of the discussion,” Rocco said. “With the governor so focused on the budget right now, we would wait to have that conversation.”

The head of an insurance industry trade group said merging the two agencies would be a mistake. Patrick Johnston, president of the California Assn. of Health Plans, said it would draw attention away from more important matters, including the creation of an online “health benefit exchange” where individuals and small businesses can buy insurance starting in 2014.

“We can’t afford a distraction when establishing the exchange and the other key elements of the new [federal law] are being implemented,” Johnston said. “There are really big, complicated things to figure out.”

The renewed attention to the regulatory question was prompted by the release of a report Thursday by the Sacramento-based California HealthCare Foundation.

The report laid out the challenges presented by the state’s approach to health insurance regulation and said the current system has few defenders. It did not offer an opinion about the best approach.

A separate report called for placing both regulators under the authority of the insurance commissioner. Bryan Liang, the author of that report, said the commissioner has greater authority to punish errant insurance companies and is answerable to voters.

“There is so much regulatory overlap,” said Liang, executive director of the Institute of Health Law Studies at California Western School of Law in San Diego. “You should focus on one agency rather than two.”

duke.helfand@latimes.com