Coalition Seeks Initiative to Limit Power of HMO Industry

A coalition of consumer groups and labor unions has launched an effort to diminish the growing power of California’s managed-care industry through a November ballot initiative.

The initiative effort, led by consumer advocate Harvey Rosenfield and the California Nurses Assn., is sweeping in scope, and several versions have been submitted to Atty. Gen. Dan Lungren. All would ban health-care companies from paying certain bonuses to doctors or nurses, lift so-called physician gag orders and prohibit health plans from forcing members to give up the right to go to court to settle contractual disputes.

The version backed by the nurses union would impose fees on certain health-care mergers, on “excessive” executive compensation and on hospitals that seek to reduce their numbers of patient beds.

The effort comes amid a growing backlash against managed care and its impact on the quality of medical care, physician autonomy and doctor-patient relationships. Some of the criticism has focused on the hefty profits registered by health maintenance organizations whose stock is traded on Wall Street, and on the lucrative salaries paid to some of their top executives.

Legislatures in California and across the country have passed, or are considering, a flurry of managed-care measures that seek to restrict certain HMO practices and protect consumers.

Managed-care executives contend the initiative is unnecessary because health plans are already well-regulated by government and because marketplace forces are providing adequate consumer safeguards.

“The market is pushing companies to address some of the issues that are behind this initiative,” said Kurt Davis, a spokesman for Foundation Health, one of California’s largest HMOs. Passage of the initiative “would only add to the burden of doing business in California and make it more attractive to be in states that don’t have these provisions.”

The initiative effort marks the second attempt by some of the groups to bring changes to the state’s medical delivery system. The last attempt--Proposition 186, the so-called single-payer health initiative to create a state-run health-care system--was resoundingly defeated by voters in 1994 after fierce opposition from business and insurance industry interests.

Other groups backing the initiative proposals are Neighbor to Neighbor, an Oakland-based health-care advocacy group; Health Access, a San Francisco-based consumer health group; and the Service Employees International Union, which represents nurses and other health-care workers in the state.

However, the unions and consumer groups are still divided over which version of the initiative to throw their collective support behind. Some groups are worried that the merger and hospital fees included in the version supported by the nurses and Rosenfield may go too far and erode support for the measure.

Rosenfield said the initiative is a response to the “concentration and intrusion of managed care and its unprecedented emphasis on corporate profits rather than patient protection.”

“Everyone has a story” about HMO problems, he said. “It’s like the way it was with auto insurance before Prop. 103, when everyone had an anecdote to tell you. Now they’re coming up to you with HMO stories.”

Supporters of the initiative say they expect to agree on a single version of the measure and, by February, begin collecting the roughly 700,000 signatures necessary to qualify it for the ballot.