Supervisors Consider Extending County HMO

In a proposal that could trigger new conflict between the county and Community Memorial Hospital, the Board of Supervisors has said it would consider extending the county’s managed care plan to private businesses that don’t already offer their employees health insurance.

At this early stage, it’s unclear exactly how the plan would work. But Supervisor Frank Schillo, who proposed the idea at a recent board meeting, said he envisions a system in which employers and low-wage employees could share the cost of rates as set by the county.

Such a plan could face formidable opposition if private insurance carriers, hospitals and doctors believe the county action would take business from them.

Supervisors already believe the most likely critic would be Ventura-based Community Memorial, which this year spent $2.3 million on Measure O, an unsuccessful campaign to turn the county’s $260 million tobacco settlement money over to private hospitals.

For years, Community Memorial and other private-sector critics have asserted that the county has been looking for ways to compete with the private sector. County officials have consistently denied such accusations, saying its HMO was simply a way of reining in the county’s costs and better administering state and federally subsidized programs for the poor.

Schillo said the county’s position is unchanged and that he only wants to deal with businesses that already have ruled out providing private insurance altogether.

“I’m not interested in being in competition with private businesses,” Schillo said. “It would have to be done very carefully and with the support of commercial [insurance] carriers.”

Schillo asked Chief Administrative Officer Harry Hufford to look at the county’s options for expanding its health maintenance organization at a recent board meeting, after the Ventura County Living Wage Coalition presented a report to supervisors on the status of the working poor in the county.

The coalition said one of the biggest problems facing low-paid workers is the absence of employer-provided health insurance. Many workers make too much money to qualify for state or federal health care coverage, but don’t earn enough to pay for private insurance out of their own pockets, coalition leaders said.

The organization estimated that between 96,000 and 170,000 county residents fall into this category. The report did not say how many businesses in Ventura County do or do not offer insurance.

“The county is responsible for the health net of the citizens of the county,” Schillo told coalition leaders. His colleagues agreed that county government should study whether its employee health plan could be expanded to cover such workers.

Supervisor Judy Mikels said she had approached Hufford earlier this year on the same subject. “I think it’s worth pursuing,” she said, but added that there are legal restrictions on the county HMO that might prevent it from being extended to businesses that have contracts with the county.

Community Memorial Executive Director Michael Bakst declined through a spokesman to comment on Schillo’s plan.

But historically, Community Memorial has worked aggressively to block the county’s health programs from expanding in a way that could encroach on the private hospital’s business.

In 1994, Community Memorial sued the county over its creation of the same HMO that supervisors now want to expand. Community Memorial argued at the time that county employees would otherwise have visited private doctors and hospitals, and said the county was trying to compete improperly with the private sector.

Ultimately, the county was allowed to create its HMO. But the private hospital has had subsequent legal success against the county.

In 1996, Community Memorial spent $1.6 million on a ballot measure campaign to block a $51-million expansion of the county hospital.

Jim Lott, vice president of the Health Care Assn. of Southern California, said the private sector’s reaction to Schillo’s plan will depend on its fine print, which has not been written yet.

“If this is an insurance program that allows people to go where they want to go for health care, it would be a good venture,” Lott said. “If this is structured as a way to divert all the tobacco money to the county, we’re right back to square one and it’s World War III. It would just be a declaration of war. . . . We’d look at all options including legal ones.”

Schillo said he is not proposing using tobacco settlement dollars to subsidize coverage; he simply believes the county could probably offer basic coverage to small businesses and their employees through county clinics and the public hospital for much less money than private insurers charge using private doctors and hospitals.

But Lott said the state already has an insurance pool that small businesses can join in order to receive lower rates than they could get on their own. He said it’s unlikely the county could offer coverage much cheaper than that unless it subsidized its plan.

Supervisors gave Hufford no deadline or specific direction for exploring the idea, and Hufford has said it could take several months of study. County attorneys already have advised him that there are legal limits on who can be covered by the county’s managed care program under its current license, he said. “We’ve got some pretty severe constraints,” Hufford said.

Supervisor John Flynn, still celebrating voters’ rejection of Measure O, said the county should not back away from expanding its HMO simply because it might be complicated or because Community Memorial might object.

“The original intent of the county’s HMO was to include the very people you’re discussing,” he said to coalition leaders, specifically mentioning people who work for small restaurants, gas stations and janitorial or housecleaning companies.

Aline Roberts, who owns an insurance agency in Thousand Oaks and serves on the Living Wage Coalition’s health care task force, said it was “premature to be taking sides” on the plan.

“I don’t think anyone wants to have their business taken away from them,” said Roberts, who also is vice president of a statewide trade organization for health insurance agents and carriers. At the same time, she said, “Everyone’s desire is to see these people insured and being taken care of.”