New Managed Care Agency Unveiled

Following through on a promise he made in January, Gov. Pete Wilson announced plans Friday to create a new state Department of Managed Health Care and abolish the Department of Corporations, which currently oversees managed care businesses.

Other duties of the Department of Corporations--including regulation of money orders, traveler’s checks and state-licensed banks, savings and loan associations, credit unions and industrial loan companies--will be transferred under Wilson’s plan to a new Department of Financial Services.

The Republican governor said the reorganization will take effect July 1, the start of the state’s new fiscal year.

The Department of Corporations has been criticized by consumer groups and others as not having either the expertise or commitment to effectively regulate the rapidly growing managed health care industry.

Wilson said in January that he would take steps to improve the quality control, accountability and efficiency of the state’s oversight of managed care programs by creating a new agency whose sole focus would be oversight of the industry.

His announcement Friday added details and a timetable to that promise.

“This reorganization plan is a fundamental first step towards ensuring that government keeps pace with the enormous changes occurring within the health care industry,” Wilson said Friday in a written statement.

“I’m confident that creating this department is the most expedient way of providing consumers with improved quality control, accountability and efficiency in the administration of California’s health care laws.”

But Jamie Court, director of Consumers for Quality Care, said Wilson’s reorganization plan is “a slick and ineffective response” to problems in the managed health care industry.

“This is an aspirin for an open wound,” Court said. A new oversight agency would be a clone of the ineffective department it is replacing, he said.