‘HMOs Are in It for the Money’

The nonpartisan California state auditor has recommended transferring HMO regulation from the Business Transportation and Housing Agency, which is dedicated to supporting businesses and improving the state economy, to “a setting where health care is a primary focus.” Frustrated HMO patients have long sought such a change.

While the HMO industry and Gov. Pete Wilson oppose the auditor’s recommendation, HMO patients with genuine horror stories at present have no place to turn. The mediating institutions of a civil society--government agencies and the courts--will not or cannot intervene. This torpid civil oversight of an industry so widely feared is a one-two punch in the face of patients already sick and dealing with pain who cannot get answers from their HMOs.

Seven thousand calls from HMO patients are received each month by the state’s “1-800” HMO complaint hotline. But in the entire 22-year history of state oversight of HMOs, only one fine has been issued against an HMO for a quality-of-care violation in a patient’s case. This scandalous failure of state government to pressure HMOs to behave is both structural and political; it must be fixed.

California’s HMO regulator, the Department of Corporations commissioner under the Business, Transportation and Housing Agency, is a single appointee of the governor--a post that carries no accountability to the public, only to the governor and inevitably to the governor’s campaign contributors: the HMO industry.

The Brown Act’s provisions for public participation in government do not apply to an individual regulator’s deliberations. There are no open meetings, no records or minutes about how decisions are reached and no votes. Currently, regulation of an industry responsible for the health of 19 million patients is based on the private deliberation of a single, unelected individual. The post-holder is so unaccountable that the last four corporations chiefs have served little more than one-year tenures. (Imagine an elected official walking away so quickly from such a job or being reelected without issuing a fine.)

Consumer groups have tried to open up the governmental oversight of HMOs by proposing either an elected regulator--accountable directly to the public--or a commission that is appointed jointly by the Legislature and the governor and that would be subject to the Brown Act. Patients could publicly comment, monitor deliberations and demand hearings. A legislative conference committee has been deliberating over which approach is best.

Unfortunately, Wilson has tried to commandeer, for his own ends, the recent freeway tragedy in which Long Beach resident Daniel V. Jones shot himself to death on live television after unfurling a banner that read “HMOs are in it for the money.” One day after the incident, Wilson announced his plan for a cosmetic reorganization of managed care oversight that would preserve the status quo.

Wilson seeks to maintain a single HMO regulator under his control--a newly titled Department of Managed Health Care that, like Corporations, still would be under the aegis of the Business, Transportation and Housing Agency, an agency concerned with supporting businesses, not sanctioning them. In addition, the new overseer post would have an almost identical budget to the current corporations HMO regulatory operation--a mere $16 million, less than $1 for every Californian in an HMO.

Wilson’s reorganization is simply a name change, and it will be a placebo for patient problems that can only lead to more frustration. The Legislature has 60 days to pass a resolution that short-circuits Wilson’s approach, and it must act quickly.

The urgency of creating a functional government oversight structure is compounded because courts have been unable to intervene against HMOs. Jones may or may not be a legitimate casualty of HMO care. If he was, Jones, like 15 million other Californians with private employer-paid health coverage, could not receive damages against an HMO that injured him, nor could his family. The legal remedies for private workers have been usurped by a federal employment law, which precludes damages. Ironically, state lawmakers like Wilson, who will soon vote on legislation permitting private employees new damages from HMOs for medical negligence, are exempt from the federal law and able to receive damages against their HMOs. As a public employee, Wilson will never know the frustration of having no remedy against a corporation that has hurt him or his family, but he must start to empathize.

HMO reform legislation will continue to frustrate unless it addresses the chief concern of the public: “HMOs are in it for the money” and yet they pay no price for their wrongdoing.

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Jamie Court is director of Consumers for Quality Care, a watchdog group based in Santa Monica. He can be reached by e-mail at cqc@consumerwatchdog.org