California health care bills are stymied by lame duck governor set on protecting HMOs
The California legislature passed a wide range of bills on managed care before it adjourned Aug. 31, but the most fundamental proposals to restructure the way health plans are regulated either died on the floor or were headed for veto by Gov. Pete Wilson.
Legislation to create a new government agency to oversee health plans passed both houses on nearly party-line votes, but Gov. Wilson has pledged to veto the bill. His main objection is to its administrative setup: The new agency would be run by a board, with members appointed by the governor and legislature. Gov. Wilson supports the idea of a new agency, but his plan would put it under the control of a commissioner appointed by the governor.
In fact, there was no dispute that the current system, which puts regulation of managed care plans in the hands of the Department of Corporations, needs to be replaced. A task force appointed by the Republican governor had recommended formation of a new agency, an idea which the Democratic-controlled legislature heartily endorsed. But legislative leaders, urged on by consumer groups, wanted a board-run agency that would, they argued, give average citizens more input. Consumer groups raised other concerns about Gov. Wilson’s proposal as well.
"It was not as simple as just whether it should be a board vs. a single person," said Peter Lee, director of consumer protection programs for the Center for Health Care Rights, a Los Angeles-based consumer advocacy organization. "There were questions about the adequacy of agency staff [in the governor’s reorganization] and a clear reporting function to the legislature."
"We feel they just wanted to politicize the process," said Maureen O’Haren, executive vice president of the California Association of Health Plans. "Regulation is supposed to be an executive function, and good government usually dictates that the governor have executive power."
Two other issues that became entangled in election-year politics, according to lobbyists and lawmakers, were proposals to allow patients to sue health plans for damages under medical malpractice law and to set up external panels to review cases when patients and HMOs disagree over whether a medical procedure should be done. But these were further complicated by the Democrats’ insistence that the two be linked together in a single bill — even though Gov. Wilson had pledged to veto any legislation that held health plans liable for medical malpractice.
"Many of us felt half a loaf wasn’t going to be of any good use to consumers," said Assemblyman Martin Gallegos, chairman of the Assembly Health Committee. "Independent external review was not going to be successful without the additional deterrent of liability to the health plans."
That’s not how the HMOs saw it, however. Ms. O’Haren pointed out that the health plan association sponsored a bill for external review — and both she and Steven Thompson, vice president for government affairs at the California Medical Association, said the malpractice liability section was added by Democrats only at the urging of the state’s trial lawyers. The wording of the bill not only would have made health plans liable for their practitioners’ malpractice, but would have circumvented existing California law putting a limit on pain and suffering awards in such cases.
But Sara Nichols, the chief counsel to the Assembly Health Committee, said there were numerous flaws in the HMO-sponsored external review proposal. "There were a number of barriers [for patients] in their bill," she explained. "For one thing, there was a $1,000 threshold on the cost of the treatment being challenged. Consumers would also have to pay a fee to get a review."
Mr. Lee said consumer groups objected strenuously to the $1,000 threshold. "First of all, it’s higher than any other state. Second, a test that costs $500 can have a life-saving benefit for a patient. And for patients with really low incomes, $500 could make the difference between whether they get the test done or not."
Electoral politics played a big part in hardening resistance to compromise on all sides, not only regarding the legislation on the new agency, but also on several other key bills. "The big piece in all these issues is that we have a governor who’s leaving office in a few short months," Mr. Lee noted. "There was a feeling among a number of consumer groups of, Why should we trust an administration whose track record has been not too stellar on consumer issues to set in motion something we’re going to have to live with for the next 10 years?’"
Mr. Thompson says, "Certainly on the reorganization bill, the fact that the governor is leaving had a big impact." The gubernatorial election "was a big part of why certain advocacy groups were unwilling to make reasonable compromises," added Ms. O’Haren.
The political infighting even threatens several key bills that made it to Gov. Wilson’s desk. The health plans association has asked the governor to veto a number of them, including:
• a bill that would require HMO medical directors to be licensed physicians in California and hold them personally liable for malpractice suits based on decisions to withhold treatment;
• a bill that would set statewide standards for utilization review procedures (an approach the health plans association supported until it was linked to another bill requiring the plans to give out clinical decision-making criteria they’ve developed);
• a bill requiring plans to give doctors what the HMOs consider proprietary data on capitation rates.
Other bills either already signed by the governor or with more promising prospects for his approval would enable patients to continue receiving previously prescribed medications even if a health plan drops them from their formularies; grant women direct access to their obstetrician/gynecologist without first having visits approved by another gatekeeping doctor; guarantee patients with chronic conditions direct access to their specialists; and require plans to provide a second opinion from another participating physician if a patient disputes a diagnosis.
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