Health is a hot topic in the race for California insurance commissioner, but power is limited

The person who wins the four-way race to become California’s next insurance commissioner will inherit a job with broad authority over policies that cover homes, businesses, cars and even airplanes.

But medical insurance? Not so much. The commissioner’s direct control over health insurers is limited, because the California Department of Insurance — headed by the commissioner —regulates only a small slice of the market.

Still, the job carries the power of the bully pulpit, amplifying the commissioner’s voice on matters of regional, statewide and national importance.

The incumbent, Dave Jones, has used that bullhorn frequently to chastise health insurers, blast the Trump administration’s efforts to roll back the Affordable Care Act and interject his voice on subjects ranging from prescription drug prices to climate change to women’s reproductive rights.

The four candidates vying in the June 5 primary to replace Jones — who is running for attorney general — will no doubt follow his lead in making use of the soap box the commissioner’s office provides. Three of the four are ardent supporters of a statewide single-payer healthcare system, which would replace the current patchwork of private and public funding with a system in which care is paid for and overseen by the state government. And they would use the office to promote it.

One of them, Democratic state Sen. Ricardo Lara (D-Bell Gardens), said one of his biggest priorities is “to ensure that everyone gets healthcare.” He is a strong proponent of government-run healthcare for all Californians and author of the now-dormant legislation, Senate Bill 562, that would create such a system.

Nathalie Hrizi, a San Francisco teacher-librarian who is the Peace and Freedom Party’s candidate, said she’s running because the commissioner’s office is “part of the political movement … for single-payer healthcare and socialism.” She added: “Insurance doesn’t serve a productive role in society.”

Asif Mahmood, a Los Angeles pulmonologist and a Democrat, said that as a medical practitioner, he regularly sees the financial challenges people face with the high cost of care. As a result, he said, he is best placed to find a “real solution which includes healthcare for all, not healthcare for most.”

Steve Poizner, a Silicon Valley businessman, strongly opposes the idea of government-run healthcare and said the candidates who are advocating it “probably should be running for a different post.” He said he would push to eliminate fraud and wasteful health spending and create a system that rewards doctors and hospitals for the quality of their care rather than the volume of their services.

Poizner, who served as insurance commissioner from 2007 to 2011 as a Republican and is running now under no party banner, leads the field with 20.7% of voter preferences, according to a recent poll by Probolsky Research.

Lara is in second place with 13.7%, followed by Mahmood with 6.3% and Hrizi with 5.9%. However, more than half of the respondents were undecided or declined to state their preference. The candidates who finish first and second in the primary will face off in the general election Nov. 6.

The commissioner’s authority over the health insurance industry has been eroded significantly in recent years, largely because of California’s bifurcated system of regulation. Regulatory discretion has increasingly shifted to the Department of Managed Health Care, which oversees not only HMOs but also some PPOs, which were previously the domain of the commissioner.

This dual system often has allowed insurers to drive a wedge between the two agencies and essentially choose their regulators. Blue Shield of California, for example, one of the state’s biggest insurers, voted with its feet and is now mostly regulated by the the Department of Managed Health Care.

The insurance commissioner has primary regulatory authority over health plans that cover just under 10% of Californians enrolled in commercial health plans, according to the California Health Care Foundation. Throw in the state’s nearly 13 million managed-care Medi-Cal plans, and the commissioner’s share drops to about 5%.

Despite this limitation, the Department of Insurance has statutory powers it can — and does — exercise. It pursues fraud, fines insurers that break the law and investigates consumer complaints about coverage. It also oversees the state’s 360,000 licensed insurance agents, with the power to investigate them, arrest them and turn them over for prosecution.

The department can also require health plans to comply with certain coverage requirements. Jones, for example, has issued rules to ensure plans have a robust network of providers, cover autism treatment and provide equal access to care for transgender people.

The commissioner also plays a role in examining merger proposals.

One power the insurance commissioner does not have, which Jones has often lamented, is the authority to prevent insurers from imposing large premium increases — a matter of significant public concern as rates have soared in recent years. The Department of Managed Health Care doesn’t have that power either.

The commissioner does examine proposed rate increases, and on occasion Jones has persuaded insurers to reduce the size of them.

Lara proposes rolling the two regulators into one, under the insurance commissioner, and granting the newly combined agency the power to reject what it deems to be unreasonable rate hikes by insurers. That would help “bring prices down on behalf of consumers,” Lara said.

A ballot measure to allow the insurance commissioner to reject health insurance rate increases failed in 2014, as did a state bill in 2012.

In previous years, candidates talked a lot more about keeping premiums down, but this year much of the campaign rhetoric has focused on the idea of universal healthcare, said Stephen Shivinsky, a former Blue Shield executive who is now consulting for health insurers.

“Trump’s election changed everything,” Shivinsky said. Federal attempts to repeal the Affordable Care Act reignited questions about how healthcare is delivered, and “that really brought about the debate on single payer,” he said.

Garry South, a longtime California campaign strategist, said he’s not surprised the Democratic candidates are talking up their support for universal healthcare, especially single payer.

“If you’re going to run as a Democrat, you have to be for single payer,” South said. Not being so “would be like running for governor of California and opposing gun control.”

Poizner, the apparent front-runner, not only opposes government-run healthcare but also thinks it is way beyond the purview of the job he’s seeking. His goals for healthcare are relatively modest, including a study of how the money in California’s $400-billion healthcare system is spent, with an eye toward trimming the fat.

“As insurance commissioner, I want to focus on what I can get done,” he said.

Bartolone is a correspondent for Kaiser Health News, an editorially independent publication of the Kaiser Family Foundation.

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