California Senate Kills Governor's Oversight Plan


Democrats in the California Senate last month killed Republican Gov. Pete Wilson's plan to overhaul managed care regulation. On a party-line vote of 22-15, the Senate rejected a plan to create a Department of Managed Health Care, which means that managed care oversight will remain with the Department of Corporations.

Sen. Herschel Rosenthal, a Los Angeles Democrat, said Wilson's plan "offered a Band-Aid solution" to a health system in need of major surgery. At the center of the dispute is what type of regulatory body will oversee California's $50 billion managed care industry. Health insurers in the state have tended to support proposals that keep regulatory control under the state's Business, Transportation and Housing Agency. The agency includes the Corporations Department and would have included the new managed care department. Rosenthal has criticized the agency, saying that it has shown "more concern for the financial health of HMOs than for the medical health of consumers." Consumer groups are pushing for a regulatory body with a greater public-health emphasis. Republicans have attacked that approach, saying it gives more power to "health bureaucrats."

Major managed care reform has moved slowly in California. For several months last year and earlier this year, Wilson refused to sign any reform measure, pending the report of a task force he and the legislature appointed to study the issue. Unless the legislature reaches a last-minute compromise this month, the issue will probably remain unresolved until Wilson's successor takes office next year.

Among the reform proposals under consideration is a bill passed by the Assembly, and now awaiting Senate action, that would allow HMO members to sue plans for medical malpractice.

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