Tough HMO Reform Appears Dead in State

The prospects of the Legislature passing tough reforms on the HMO industry appear dead for the year, reform-minded lawmakers conceded Thursday.

With less than two weeks to go before the 1998 Legislature adjourns, bills that would allow patients to sue health maintenance organizations for pain and suffering--a top priority for reformers--are going nowhere, stalled in committees or held up by opponents’ maneuvers.

So tense is the atmosphere involving the lawsuit issue that one such bill became a battleground among Democrats, with threats of reprisals for deserting the HMO reform cause.

More modest reforms are still moving through the Legislature, and some have been passed and signed by Gov. Pete Wilson. But the overhaul of the industry through a series of major changes and new controls that Democratic proponents predicted would take place this legislative year is not materializing, key leaders said.

For legislative Democrats, reform of HMOs had been a key element in their campaigns for reelection.

“Sadly, for the consumers, we were not able to reach consensus on [HMO] consumer protection, so we’ll have to try again in January with a new governor,” said Assemblyman Martin Gallegos (D-Baldwin Park), chairman of the Assembly Health Committee.

In any event, Gallegos said, Wilson had been expected to veto legislation allowing major lawsuits against HMOs, though the bills were stopped long before that stage was reached.

At least, said Gallegos, if the bills had advanced to the Senate and Assembly floors, “we would have had some very active debate that the public would have had an opportunity to hear.”

If the Legislature fails to pass bills allowing broader lawsuits against HMOs, said Senate Leader John Burton (D-San Francisco), consumers will be left with only weak reforms.

“By and large, any reform that the HMOs would [support] is not necessarily going to be reform,” Burton said. “If you are trying to reform an institution and they are buying into what you are doing, it ain’t really much reform.”

In Burton’s view and that of most, but not all, Democrats, “real reform” must give patients the ability to sue for major damage awards. Proponents, including patient attorneys, contend that this would hold HMOs financially accountable for the quality of care given to patients.

Under a quirk in federal law, most HMO patients in California, when injured through malpractice or denied care, are not able to sue for pain and suffering. Only in Texas can such lawsuits be filed.

Californians can sue an HMO only for the cost of treatment and economic losses such as wages.

Among many Democrats showing frustration over the lawsuit issue, Assembly Speaker Antonio Villaraigosa (D-Los Angeles) said, “Without [recourse to lawsuits], there is no way, really, for HMOs to be accountable to consumers.”

Some possibility remains in coming days that so-called liability bills affecting HMOs can be revived, Villaraigosa said, but “next year looks like the more realistic target date.”

Meanwhile, Democrats were scrapping for a second day Thursday over a bill by Assemblywoman Liz Figueroa (D-Fremont) that would allow the broader HMO lawsuits.

With two other such bills picked off earlier through political maneuvering, Figueroa’s represented the last chance for Democratic proponents to bring a tough HMO reform measure to the Assembly floor.

But on a Senate committee where the bill needed majority approval to advance, three Democrats joined Republicans in preventing passage.

Two Southland senators on the Appropriations Committee, Charles M. Calderon of Whittier and Teresa Hughes of Inglewood, did not vote. Sen. Patrick Johnston (D-Stockton) voted against it, setting off charges of betrayal among Democrats in the Assembly.

Johnston charged Thursday that Villaraigosa retaliated for the defeat of the Figueroa bill by taking “hostage” and refusing to act on a Senate-passed bill strongly supported by labor.

The bill, carried by Johnston, would continue to allow California workers to receive workers’ compensation and disability insurance payments even if they were unable to prove they were U.S. citizens.

Villaraigosa, informed of Johnston’s charge, told a reporter that he supports the bill and that it must have been derailed in the Assembly “inadvertently.”

“We will have to get this one out,” he said.

Taking bills hostage is a game traditionally played by both legislative houses during the closing days of the session. As time runs out, the Assembly and Senate capture bills of the other chamber as a way of applying pressure to act favorably on legislation of special importance to certain special interests or authors.

Still moving through the legislative process are bills backed by HMO reformers that would require any medical director of a plan--the individual who normally would approve or deny care--to be licensed in California.

Also pending is a bill that would remove from the governor the ability to appoint a state HMO overseer and instead give such authority to a five-member board appointed by the governor and the Legislature.

Another measure would require HMOs and medical insurers to cover oral contraceptives approved by the Food and Drug Administration.

Already passed and signed by the governor this year are bills that would allow women direct access to specialists including gynecologists and obstetricians, allow patients a second medical opinion, allow patients continuity in their prescription drugs, and require health plans to show prospective enrollees an easy-to-read chart comparing benefits of various plans.