Davis Holds Off on HMO Benefits

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Sacramento Bee

When Gov. Gray Davis issued an HMO reform plan last month, he put off addressing the question of whether health maintenance organizations should be forced to offer certain new benefits.

A week before the Legislature is scheduled to adjourn for the year, he has yet to indicate whether he will sign any of at least 13 proposals pending in the Legislature that would require HMOs to cover a variety of illnesses, prosthetic devices and procedures, all of which insurers say would send health care premiums climbing.

The measures include mandated coverage for mental health care; contraception; diabetes treatment; early intervention for a rare, treatable disease afflicting babies called PKU; hospice care; medication for the terminally ill; and screening and treatment for certain cancers.

Davis aides say he is still working to develop a logical framework for adding to the existing list of health care mandates, but wants to avoid adding required benefits haphazardly, regardless of how popular or well-intentioned the proposed benefits might be.

“I don’t know that the issue of mandates is going to get resolved this year,” said Davis spokesman Michael Bustamante. “You can’t piecemeal something like this. It’s such a big issue. Where do you start? Where do you end?

“And how do all of these actions impact not just the insurance industry, but more importantly, businesses’ ability to provide health care to individuals?”

Authors of the legislation remain determined and hopeful. Assemblywoman Helen Thomson, D-Davis, whose AB 88 would require coverage of certain severe mental illnesses, said she expected Davis to sign her bill.

“This is not about just passing a bill for me. We have costs very well documented, and the governor will see a bill,” Thomson said. “I’m not going to put up with continued stigmatization of folks who are mentally ill. . . . We don’t need any more studies. We need to do it. Enough is enough.”

Davis last month avoided the question of whether to impose new health coverage laws when he released his long-awaited HMO reform plan, which sought to condense and focus nearly 70 bills on the subject circulating in the Legislature.

His plan would provide external review of HMO medical decisions, allow patients to sue in some circumstances, create a department to regulate HMOs, establish a state consumer advocate for patients, enact a new list of patients’ rights and initiate several restrictions designed to keep medical groups solvent.

Despite the omission of mandates from the plan, numerous people who attended a meeting with Davis negotiators last week said they thought he was ready to sign at least some of the Legislature’s proposals, particularly ones to require coverage of contraceptives and mental illness.

Davis advisers caution, however, that he is likely to disappoint some lawmakers.

“What Gray does not want to do is cherry-pick a bunch of stuff that sounds politically attractive without any underlying thrust about what it is we’re trying to do here,” said Davis’ chief political adviser, Garry South. “I don’t think he thinks that in the last 10 days of the session there ought to be rushed through a whole bunch of mandated coverages without any costing out, just so (a legislator) can say “I just passed a bill for requiring coverage of ingrown toenails.”‘

South noted that Davis didn’t win election campaigning for sweeping health care reform. He said polling has shown that voters’ principal concern about health care is cost.

“If we had actually believed in 1998 that voters were out there salivating for massive overhaul for the private health care delivery system, you can damn well believe that we would have made it an issue,” he said.

South’s comments came as one group lobbying for health system changes raised questions about what it called South’s “conflicting and confusing roles as a public adviser to the governor and paid consultant to private industry.”

South has signed on as a paid consultant to Burson-Marsteller, a governmental public relations firm that includes “Californians for Affordable Health Reform,” a coalition of business groups and employers, among its clients. He says his consulting contract gives him broad latitude to avoid subjects on which he advises the governor, and that he has had no contacts with clients on health care.

But Jamie Court of The Foundation for Taxpayer and Consumer Rights, a group advocating major health system changes, argued to South in a letter Wednesday that the consultant has nevertheless played a “role in the Davis administration’s scaling-back and slowing-down of HMO reform.”

South, he said, “convinced the governor that polling shows that HMO reform is not a top priority for the public, and the governor then used the polling . . . to promote a moderate, industry-friendly HMO reform agenda.

“It raises the issue . . . of how you separate the interests of your public client, the governor, and those of the private clients of the consulting firm that pays you an undisclosed sum. You can only do so in your head. Until you expound further on your relationships, the public only sees one man with many potential loyalties. This smells.”

South dismissed the criticism as unfounded and said he had advised Davis that “there is no public demand for a massive overhaul of this system” long before he began work for Burson-Marsteller.

“There is no public mandate to do all of this stuff,” he said. “Yes, you can go out and find a constituency that wants hangnails to be covered. You can always find a constituency that wants more than what they have.”

A recent closed-door session involving Davis officials, key lawmakers, insurers and a consumer advocate centered largely around a list of criteria proposed for prioritizing potential mandates. The list, circulated by state Health Director Diana Bonta, focused on prevention and equity issues.

Consumer Watchdog
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