Sacramento Should Avoid a Jumble in HMO Reform

To assess the policy implications of the phenomenal growth of HMOs in California, the state Legislature sensibly created a Managed Care Task Force last year composed of HMO representatives and public advocates like Consumers Union. Gov. Pete Wilson appointed two-thirds of its 30 members and hailed the task force as a way of ensuring that the state’s HMO reforms are driven not merely by emotional anecdotes about lapses in care but also by thoughtful assessments of medical necessity.

Last week, Wilson said he would veto all but one of the several dozen HMO bills that are active in the Legislature, regardless of their content; he suggested they amount to a “piecemeal, uncoordinated approach” to health reform. It would be better, he said, to wait until the state panel issues its recommendations early next year.

True, it makes no sense to pass state laws that, for example, would govern the scheduling of medical appointments, as one bill would do. However, task force members are justified in worrying that the panel might become a graveyard for health care legislation and is asking Wilson to consider legislation on its merits, not reject reforms en masse.

On merit, we recommend two bills that won bipartisan support and that need not wait:

* SB 324, by Sens. Herschel Rosenthal (D-Los Angeles) and Tim Leslie (R-Carnelian Bay). Today, medical directors of HMOs who decide what kind of care is “medically necessary” are not required to hold a California medical license; thus they can make decisions with extensive legal impunity. This bill, sponsored by the Wilson-appointed Medical Board of California, requires medical directors to hold such a license. Appropriately, it recognizes that physicians practice medicine not only when they give care in an operating or examining room but when they make decisions about it in a managed care office.

* AB 536, by Assemblyman Martin Gallegos (D-Baldwin Park). Unlike many of the HMO bills now in the Legislature, this bill doesn’t attempt to legislate medicine by telling health plans how they should operate. Rather, it fosters free-market competition by simply requiring health plans to disclose, upon request, their criteria for authorizing or denying care.

Such legislation makes for sound law and sound medicine. But for most of the glut of reform bills, the governor is correct: Sacramento must coordinate its reforms. The task force is due to make its recommendations early next year, and a few more months is not too long to wait to get a better chance at coherent HMO reform.