Garamendi Lists Initial Goals for Health Care Reform

Insurance Commissioner John Garamendi on Monday outlined goals for health care reform in California that emphasized the need to provide medical coverage this year for children and pregnant women.

Other goals should be to prohibit insurance companies from canceling small-group policies because claims rise too high, to control health insurance premium increases, and to limit the use of pre-existing condition restrictions, Garamendi said.

He said state budget woes prohibit the immediate and sweeping reforms he had promised in his campaign for insurance commissioner last year. But he said the first steps should be taken this year, regardless of the state’s economy.

While outlining some goals, Garamendi confined suggestions for action in most areas of health insurance to the establishment of task forces, study groups and committees. Most of the goals he offered would require action by the state Legislature before they could be implemented.

In an address to the American Assn. of Preferred Providers at UCLA, the commissioner said he supports a proposal co-authored by Assemblyman Burt Margolin (D-Los Angeles) and state Sen. Becky Morgan (R-Los Altos Hills) that would guarantee coverage for pregnant women and their infants, along with some preventive care for young children.

Passage of the Margolin-Morgan bill this year “could put an end to those horrifying stories of California women going without any prenatal care, of infant victims lying helpless in hospital intensive care units, and of California’s children going without the most basic elements of preventive care,” Garamendi said.

“I am sick of those stories, and I don’t want to read any more of them. They are an embarrassment to all of us.”

The Margolin-Morgan bill would provide insurance to all pregnant women and to children under 18. The state would negotiate rates with private providers, and recipients would be charged on a sliding scale. Subsidies for those unable to pay would come from a payroll tax on businesses and existing state and federal funds. The bill has passed the Assembly Health Committee and is pending in the Ways and Means Committee.

Garamendi also criticized the practice by some insurance companies of canceling policies purchased by employees of small firms, such as restaurants, when illness or age caused more costly claims to be filed. “The search for reform and solutions must begin here, in the small-group marketplace,” he said.

All insurers should be required to renew all policies they issue, the commissioner said.

“Second, the legislation must set real limits on premium increases, limits that do not allow insurers to individually penalize a small group of insured because someone in that group experienced a medical problem,” he said.

“Third, it must limit the use of pre-existing condition restrictions, and ban the repeated imposition of those restrictions as individuals move from one job to another.

“Fourth, reform legislation should compel insurance carriers, within limits of (selling) capacity, to issue a policy to any small group that wishes to purchase one.”

During last fall’s campaign, Garamendi had promised to work toward establishment of a system of “community rates” under which all residents of a region of the state would be covered at the same rate regardless of their health.

He repeated that theme Monday, saying California ought to move toward that goal this year by “stiffly limiting, if not banning entirely, the practice of basing insurance premiums on the health status of the individual or group.”

Finally, Garamendi said: “We should implement a state pooling mechanism to enable employers of small firms to join together and increase their bargaining power in seeking insurance.”

He suggested that competition between such a state-organized pool and the private insurance marketplace be encouraged, “perhaps on a statewide, or perhaps on a pilot project basis.”

“Our main concern today is that these small-group reform efforts must not stop short of what can and must be accomplished,” the commissioner said. “Specifically, most of the proposals now before the Legislature, including the model approved by the National Assn. of Insurance Commissioners, do not go far enough toward limiting the use of health status in the setting of insurance rates.”

Garamendi acknowledged that the immediate reforms he was advocating “will not bring universal (health) access to California.”

“Nor are they likely to have any substantial impact on the price of health insurance for the great majority of Californians,” he said.

He added: “We believe these reforms can be meaningful and can be adopted as a first step toward--rather than as a bulwark against--larger reform efforts.”

Garamendi said he will take regulatory action aimed at protecting senior citizens from abuses in the marketing of so-called medigap insurance, policies that provide the elderly with coverage above the Medicare limits.

He also said he would establish a task force on long-term care insurance and appoint a coordinator for senior citizen health insurance issues.