Garamendi Plans Overhaul of Insurance Department : Consumers: The newly elected commissioner also vows to work for comprehensive health coverage for all Californians.

In an aggressively pro-consumer speech, John Garamendi, California’s first elected insurance commissioner, pledged Thursday to overhaul the Department of Insurance and to work for comprehensive health insurance for all residents.

In his first speech since taking office, Garamendi told business and labor representatives meeting in Pasadena to discuss the rising costs of health insurance that one in five Californians cannot afford health insurance. He described the situation as a disaster and placed considerable blame on the agency he took over 12 days ago, saying the California Department of Insurance had ducked its responsibilities to consumers for years.

Garamendi promised a complete overhaul of the department, including the creation of a consumer-issues division reporting to a deputy director for consumer affairs. Among the division’s duties, he said, will be publication of a booklet showing which insurance companies pay claims on time and which routinely violate state laws requiring turnaround on claims within 30 days.

“The Department of Insurance is changed,” Garamendi declared. “It is no longer the department for insurance companies.”

The Department of Insurance has regulatory authority over only 30% of the health insurance companies in the state, all of them indemnity plans that reimburse consumers for their medical expenses.

Garamendi decried the fact that so many Californians can’t afford private health insurance, and contrasted that with the fact that a whopping 12% of the state’s economy goes to health care. He offered no specifics on how he planned to extend health insurance to everyone without increasing that percentage.

In an interview, he said the department needed better data on the costs and frequency of medical procedures in order to address the question of whether rationing will be necessary to reduce health-care costs. Because that data is lacking, Garamendi said he could not address what procedures might have to be cut out of insurance coverage in order to economically meet his goal of universally covered basic and preventive health care.

The majority of insured Californians are covered by health maintenance organizations (HMOs) such as Kaiser Permanente, which are regulated by the state Department of Corporations.

But Garamendi said he would seek legislation to extend the insurance department’s regulatory authority to prevent discriminatory practices by any health insurer, including HMOs. One such practice, Garamendi said, is “cherry picking”: the selection by companies offering health insurance of only those people least likely to run up medical bills. People infected with HIV, the virus that causes AIDS, are thus discriminated against, Garamendi said. The elderly are also likely to be turned down for coverage.

“Try to be a 65-year-old person and try to get Kaiser (Permanente, a large California HMO) coverage,” Garamendi said.

Kaiser spokeswoman Lynn Brassfield rejected Garamendi’s suggestion that the HMO discriminates against the elderly.

She said 90% of the plan’s members are enrolled in group plans and undergo no individual eligibility screening. The remaining 10% who buy individual policies from Kaiser are asked questions about their health histories, Brassfield said, but age is not an eligibility factor.

Garamendi said his department would “hang” any insurance company “acting inappropriately,” but did not specify how he planned to discipline companies that failed to abide by department regulations.

One person less than pleased with Garamendi’s comments was Jan Andrea Meisels of the Health Insurance Assn. of America, one of about 200 people who attended the conference at the Pasadena Hilton. The conference was sponsored by the Edmund G. (Pat) Brown Institute of Public Affairs at Cal State Los Angeles and the Jesse M. Unruh Institute of Politics at USC.

“I would hope that the commissioner realizes he must not only have consumer issues at heart but also the interests of insurance companies in remaining solvent,” Meisels said.