Sacramento revisits healthcare reform

Times Staff Writer

The California Legislature is moving to curb some of the health insurance industry’s most profitable and contested practices as lawmakers resurrect portions of Gov. Arnold Schwarzenegger’s unsuccessful proposal to expand medical coverage.

More than a dozen health bills are advancing through the Legislature, many over the objection of insurers. Some of the proposals were transplanted from the plan that passed the Assembly last year, only to be rejected in the state Senate in January. Other measures are newly devised by the Democrats who control the Legislature.

The bills would require insurers to spend at least 85% of their earnings on patient care; block insurers from canceling policies of patients who need extensive care; and force them to cover more procedures, such as maternity services.

Over the objections of the major doctor and hospital lobbies, the Assembly approved a measure backed by Schwarzenegger that would require medical providers to publicly reveal their costs and medical performance.


In a sign that a desire for piecemeal healthcare changes is strong this election year, some of the Democrats’ bills even have picked up votes among Republicans who did not support Schwarzenegger’s package.

“In the aggregate, it could be pretty significant,” said Sheila Kuehl (D-Santa Monica), chairwoman of the Senate Health Committee, of the legislation. “I think it’s just getting to the point where the opposition has just overreached so badly and the insurance companies’ actions have been so egregious that both sides of the aisle are getting fed up with them.”

The governor’s healthcare proposal was rejected in large part because of its $14.9-billion price tag, which senators considered untenable with the state deep in the red. But the bills that are winning initial approval now put most of their costs on the healthcare industry.

Daniel Zingale, a senior advisor to Schwarzenegger, said the governor favors many of the ideas, if not the exact language, in the bills and plans to add others into the mix in a few weeks.

“This year, the first floor of healthcare reform will be built, and it will make current coverage more secure, control costs, promote prevention and end the worst anti-consumer practices by HMOs,” Zingale said.

Many of the bills would affect the insurance market for individuals who buy coverage themselves rather than through employers -- now more than 2 million Californians.

It is a more lucrative niche for insurers than selling policies through employers because insurers have more leeway to set the terms of individual policies and face fewer regulations about what medical procedures must be covered and which customers must be accepted.

The Senate passed a proposal by the incoming president pro tem, Darrell Steinberg (D-Sacramento), that would make it easier for individual customers to compare competing plans. The bill also would limit maximum out-of-pocket costs for those individuals and force insurers to offer a whole range of policies if they want to do business in the state.

Nicole Evans, spokeswoman for the California Assn. of Health Plans, which represents health maintenance organizations, attributed the rush of bills to “a lot of pent-up interest and energy” generated by last year’s focus on a healthcare overhaul.

“We think these bills are going to raise costs and, in the end, make the problem worse, not better,” she said. “We think in the end Republicans and Democrats will realize that.”

Some insurers that backed the governor’s plan have been lobbying against portions that have been revived, such as the Steinberg bill and the cap on profits. Tom Epstein, a spokesman for Blue Shield of California, said the company initially agreed to support those measures because the governor’s plan would have required all Californians to obtain insurance -- adding more than 3 million people to the insurance market.

But placing limits on profits, Epstein said, “is not something that we feel comfortable embracing in the absence of comprehensive reform.”

Opposition from insurers, however, is not dissuading Republicans -- a traditional ally of the industry -- from supporting some new restrictions. On Thursday, 12 of 32 Assembly Republicans joined Democrats to require insurers to obtain approval from state regulators before canceling coverage for people who have become ill and submitted medical bills.

That bill, by Assemblyman Hector De La Torre (D-South Gate) is one of three measures the Assembly has passed to address that practice, which has prompted state investigations of -- and in some cases led to fines for -- many of the state’s biggest insurers. Those companies include Anthem Blue Cross, Blue Shield, Kaiser Permanente, PacifiCare and Health Net.

Some GOP lawmakers also are agreeing to expand the type of procedures insurers must cover. Twelve of 15 Republicans joined their Democratic colleagues in the Senate and voted to require insurers to pay for surgery to fix cleft palates, a common birth defect that occurs in one of every 790 babies.

A panel of experts said this would add only $146,000 in annual costs to California’s $79-billion insurance industry, but insurers are opposing it because they don’t want lawmakers limiting the policies they offer.

On the Senate floor in mid-May, five of 15 Republicans ignored industry opposition by voting to compel insurers to reveal how often they rule that procedures are not medically necessary.

The bill, by Kuehl, also would force insurers to disclose the medical qualifications of the employees who make those decisions.

That same day, four Republican senators voted to pass another Kuehl bill that would require insurers to offer customers the option of adding, for an additional charge, coverage to include the purchase of wheelchairs, oxygen tanks and other durable medical equipment.

Sen. Sam Aanestad (R-Grass Valley), who voted for the measure, said insurance policies have become too complicated to understand.

“I’ve got grown kids who have advanced college degrees, and they’re not sure if something’s covered or not,” he said.