Senate Passes Low-Cost Auto Insurance Bill : Legislature: Prospects appear good in Assembly. But reform of workers’ compensation system seems doomed.

Attempting to crack decades of political paralysis over reform of the costly automobile insurance system in California, the Legislature on Monday appeared headed toward approval of a sweeping overhaul despite the opposition of powerful special interests.

With the legislative session only hours away from scheduled adjournment, the comprehensive insurance proposal was passed on a bipartisan 24-7 vote of the Senate and sent to the Assembly, where Speaker Willie Brown (D-San Francisco) is its chief proponent.

The bill seeks to create a low-cost basic policy by curbing the forces that drive up the price of coverage, such as by limiting the compensation of doctors and lawyers who represent drivers. Motorists would have to prove that they are insured.

But meanwhile, last-ditch efforts to reform the problem-plagued $12-billion workers’ compensation insurance program seemed doom.

A spokesman for Gov. Pete Wilson, who had made workers’ compensation reform a top priority, confirmed that the Republican chief executive intends to make failure to enact “real” reform a high-profile campaign issue against Democrats in the fall.

As shouting protesters kept up their summer-long demonstrations against state budget cuts outside the Capitol, lawmakers wound down their marathon eight-month session and geared for up reelection campaigning.

But big issues awaited resolution before the scheduled midnight adjournment. They included reducing from a two-thirds vote to a simple majority the voter margin required for approval of local school bond issues; requiring insurance companies to make health coverage available to small business employers; protecting fragile forests from logging, and restoring civil rights protections.

But insurance--for drivers, injured workers and employees struck by illness--took center stage throughout the day.

The automobile insurance program was opposed by powerful economic interests with a stake in the system: personal injury lawyers, physicians, insurance companies and auto body repair shops. Additionally, Consumers Union opposed it on the grounds that it does not provide substantial benefits for the public. In the Capitol, a bill that is opposed by virtually every special interest usually is considered a good bill.

Among other things, the bill by Sen. Bill Lockyer (D-Hayward) is aimed at creating a basic-coverage policy whose average annual cost is about $288 by cutting back the economic forces that drive up the cost of coverage.

For instance, limits would be imposed on the compensation of doctors who treat accident victims and on lawyers who would represent drivers in a newly created system of small claims courts.

Additionally, starting in 1994, motorists would have to prove that they are insured before their vehicles could be registered; current minimum levels of coverage for bodily injury and property damage would be reduced, and the legislation would distinguish between serious and non-serious injuries to try to reduce litigation.

The bill also would require state Insurance Commissioner John Garamendi to try to establish an equalized rate procedure throughout California so that the premiums of drivers in high-cost areas, such as Los Angeles, would not be subsidized by motorists in low-cost rural localities.

“The target . . . is to produce a low-cost policy that most, if not all, Californians can afford,” said Lockyer, noting that political gridlock over auto insurance reform has won out since the 1960s.

Wilson’s insurance adviser, Marjorie M. Berte, said the governor does not have a position on the Lockyer bill. She noted that Wilson favors no-fault insurance and that the Lockyer bill does not contain that provision.

Berte said she was “very doubtful that the (Lockyer) bill saves any costs for consumers.” She said if the bill became law, trial lawyers “will use this in the future to forestall real reform.”

On the workers’ compensation front, negotiations to reform the system lurched toward collapse amid heavy lobbying from an array of interest groups.

Assemblyman Burt Margolin (D-Los Angeles), a leader in the reform effort, said he was unsure whether the bill could win passage even in the Democratic-controlled Assembly, let alone win Wilson’s signature.

Virtually everyone agrees that the system of compensating workers for their injuries is riddled with inefficiency and meager payouts to beneficiaries, but employers, employees, doctors, insurance companies and attorneys fear that reform will come at their expense.

“There wasn’t enough movement for people to reach agreement,” Margolin said of the latest overhaul efforts.

But the issue is certain to remain alive in the fall elections for the Assembly and Senate.

A memo from an insurance industry lobbyist disclosed that it had “learned that Gov. Wilson has selected workers’ comp reform as one of a handful of key issues he will take statewide.”

The memo was dated last Friday, at the same time the governor was saying he hoped for an accord with the Democratic-dominated Legislature, which tends to support labor unions and workers in such issues.

Asked about the memo, Dan Schnur, a top-level assistant to Wilson, said it is no secret that “the governor believes that if this Legislature isn’t willing to accomplish real workers’ compensation reform, he’s going to make it an issue in the fall campaign.”

There was a brighter outlook for legislation that would take a major step in the long-promised effort to provide health insurance coverage to some 100,000 California workers who are not covered. Pending in the Assembly, the bill, by Margolin, has cleared the Senate, 24 to 1.

The bill would require insurance companies to sell and renew health insurance to small employers “regardless of their (employees’) health status or risk” and to limit renewal rate increases to a maximum 10% a year.

Affected would be about 100,000 employees of small businesses that are not covered by an employer plan, an aide to Margolin said. The bill defines a small business as one with three to 50 workers.