Tag Archives: insurance industry

Calif. Legislators: Choice Is Between Insurance Industry And Rest Of Us

Los Angeles Times business columnist Mike Hiltzik offers a stark choice to state legislators in his Wednesday column. What'll it be, has asks: the millions of dollars that the insurance industry pours into your campaigns and treasure chests, or the millions of Californians battered by health premiums that kill the family budget or company benefits account? Plus the 8.2 million Californians with no health insurance at all?

Los Angeles Times business columnist Mike Hiltzik offers a stark choice to state legislators in his Wednesday column. What'll it be, has asks: the millions of dollars that the insurance industry pours into your campaigns and treasure chests, or the millions of Californians battered by health premiums that kill the family budget or company benefits account? Plus the 8.2 million Californians with no health insurance at all?

The choice Hiltzik lays out is between legislation (AB52 by Mike Feuer) that would finally give the state insurance commissioner the power to deny or modify unreasonable health insurance rate increases before they go into effect, and the exaggerated or outright false charges being slung by the industry. That opposition campaign is just a  cover for the real issue: the power of industry campaign money and its lobbying force.

From 2007 through this year, for example, Anthem Blue Cross has made campaign contributions totaling nearly $5 million to candidates, parties and political action committees, according to state records. Blue Shield has contributed more than $2.3 million in the same period…..

Across the country, prior approval of healthcare rates is becoming more the norm, now effective in 34 states and the District of Columbia for at least some policies, according to the Kaiser Family Foundation. The procedure closes a gap left by federal healthcare reform that leaves rate regulation to the states and provides only loosely for premium review. Once again, AB 52 provides state legislators with a chance to declare whom they really represent — their voters or their campaign donors.

The insurance industry is going after legislators that it has contributed to, or who otherwise look susceptible. That helps explain why the legislation barely squeaked through a key committee vote last week after two Democrats voted against it.

The final vote in the Assembly has to come by Friday. Lobbyists will be swarming the halls outside the chamber, intending to ride the last-minute chaos of speed-voting to kill the rate regulation bill. Among the lies the lobbyists will be forcing down legislators' throats is that regulation will somehow raise, not lower, insurance premiums. Again, Hiltzik nails it:

Last year both Aetna and Anthem backed away from huge rate hikes after independent actuaries found glaring mathematical errors in their rate filings.

A study in 2009 by the New York state insurance department found that these sorts of errors, and worse, were rife under that state's then-deregulated system, which resembled California's toothless regime. New York found that insurers routinely under-reported such errors and refunded (retroactively) only about a third of the ill-gotten excess to policyholders. The study helped goad lawmakers there into reinstating prior approval after about 15 years without it.

As it happens, California's health insurance lobby has tried to use New York's experience as Exhibit A for the case against prior approval. The association contends that five of the 10 states with the highest individual healthcare premiums are subject to prior approval, with New York leading the list. There's a problem with this claim, however: New York's prior-approval rules went into effect only this year. In other words, New York's high individual premiums are the result, if anything, of the absence of prior approval.

When I asked a CAHP spokeswoman where the figures came from, she said they conducted "some unique research." That's one way of putting it.

Even if AB52 passes the Assembly, it still has to take the same tortured path through the state Senate. The outrageous rate-spiking by insurance companies last year and this ought to be the final shove for honest health insurance regulation in California, just like the state has for auto and homeowner insurance. But in today's legislature, nothing is sure. To take action with a message to your legislator, click here.

If you've read this far and want to know more,  Read Consumer Watchdog’s new report on how rate regulation works to hold down premiums. And see what Sen. Dianne Feinstein says about the need for regulation.


Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

Insurers Add Another $1 Million to Stealth Campaign to Elect Villines Insurance Commissioner

Allstate, Mercury Top $ 1 Million Each in Past Month; Both Have Big Issues Before Department of Insurance

Campaign for Consumer Rights News

October 25, 2010

Contact: Doug Heller 310-392-0522 ext. 309

Santa Monica, CA – In less than a month, ten insurance companies have spent $3.8 million in an unprecedented campaign to pick their next regulator. Even the disgraced Insurance Commissioner Chuck Quackenbush didn’t see this much insurance money flow this quickly into his campaigns, according to the nonpartisan Campaign for Consumer Rights.  

Voters viewing the advertisements paid for by the insurance industry don’t know their source, however, because the insurance industry money is being laundered through a Chamber of Commerce committee called JobsPAC. The campaign ads attacking candidate Dave Jones and endorsing his rival Mike Villines do not list the insurance companies’ funding.  The contributions to the campaign, which began on September 27th, have averaged about $1,000,000 per week and have been followed by media buys against Jones and for Villines of approximately the same amount.

The total industry donations to date are:

Allstate Insurance   $1,150,000

George Joseph – Mercury Insurance $1,000,000

Liberty Mutual   $640,000

Progressive Insurance   $390,000

Farmers $225,000

Anthem Blue Cross  $150,000

HealthNet   $100,000

P/C Insurers Association of America $74,000

American Insurance Association   $52,000

Personal Insurance Fed. of California $25,000

“Californians will not see these insurance companies listed on all the ads about the insurance commissioner race, but they need to know that the insurance companies are desperately trying to buy the office so they can own their regulator,” said Harvey Rosenfield, the author of the 1988 insurance reform measure Proposition 103 and Chairman of the Campaign for Consumer Rights.

Last week the Campaign For Consumer Rights launched a radio advertisement to inform voters insurance companies are paying for the advertising.  Listen to the advertisement at http://www.stoptheinsurers.org

Top Funders Have Company-Specific Issues Before Department of Insurance

The top funder to the insurance industry’s campaign to elect Villines, Allstate Insurance, is currently locked in a battle at the Department of Insurance over whether its so-called “Your Choice Auto” program is legal or an overpriced marketing scheme that is unfairly discriminatory.  The company of the second biggest donor to the campaign for Villines, Mercury Insurance Chairman George Joseph, is the subject of two Department of Insurance enforcement actions relating to illegal and discriminatory practices and has a pending rate hike proposal before the Department.  For both companies, it is generally expected that final decisions in these matters will not be made until the next Commissioner takes office.

“These insurance companies are spending millions to influence this commissioner’s race, because the winner will be judge and jury to cases worth tens of millions to the companies,” said Doug Heller with Campaign for Consumer Rights. “This is a textbook case of conflict of interest.”


Campaign for Consumer Rights is the advocacy and campaign affiliate of the nonprofit organization Consumer Watchdog and is online at http://www.CampaignForConsumer…

Arnold Supports Health Care Reform – Just Not In California

One of the enduring takeaways of the Schwarzenegger era is just how much latitude he is given on the national level as some kind of transformative post-partisan leader, when those same reporters know that California is crumbling into dust under, and in many cases because of, his leadership.  We witnessed this again today as national media types heaped praise on the Governor issuing a letter about the Obama health care reform plan:

“As Governor, I have made significant efforts to advance health reform in California. As the Obama Administration was launching the current debate on health care reform, I hosted a bipartisan forum in our state because I believe in the vital importance of this issue, and that it should be addressed through bipartisan cooperation.

“Our principal goals, slowing the growth in costs, enhancing the quality of care delivered, improving the lives of individuals, and helping to ensure a strong economic recovery, are the same goals that the president is trying to achieve. I appreciate his partnership with the states and encourage our colleagues on both sides of the political aisle at the national level to move forward and accomplish these vital goals for the American people.”

I love the phrase “significant efforts,” by the way.  Others might call them “failed efforts,” but YMMV.

But this “praise” for health care reform is just a piece of paper.  One would think that the national media would seek to know the actions of the Governor on health care – one would be wrong, but one would still think that.  And it would take about 10 seconds of Googling to figure out that the Governor has vetoed key elements of the legislation working through Congress.  Last year he vetoed AB1945, which would have banned rescission, the insurance industry practice of dumping sick customers for technical violations on their applications like typos the moment that they try to use their policies for treatment.  He vetoed SB840, the universal health care bill, on multiple occasions in the past.  He vetoed SB1440, which would have mandated that insurance companies spend 85% of premiums on medical care.  He vetoed SB973, which would have created a public insurance option by linking local and regional measures.  He vetoed AB2, expanding the state’s high-risk pool for people with pre-existing conditions.

He basically has vetoed many of the same provisions to be found in the current health care bill.  And he is threatening to veto every bill on his desk this year, including another bill to ban rescissions so that customers who have paid insurance premiums for years aren’t left to die when they want to use their policies.  Anthony Wright notes some of the other bills:

* AB 119 (Jones): GENDER RATING, to prohibit insurers from charging different premium rates based on gender.

* AB 2 (De La Torre): INDEPENDENT REVIEW, to create an independent review process when an insurer wishes to rescind a consumer’s health policy, create new standards and requirements for medical underwriting, and requires state review before plan approval. Also raises the standard in existing law so that coverage can only be rescinded if a consumer willfully misrepresents his health history.

* AB 98 (De La Torre): MATERNITY COVERAGE, to require all individual insurance policies to cover maternity services.

* AB 244 (Beall): MENTAL HEALTH PARITY, to require most health plans to provide coverage for all diagnosable mental illnesses.

Dan Walters calls these bills “nothing of cosmic importance”.  Well sure, he’s not going to have a kid, and women are charged more than men by insurance companies anyway!  To an entitled white man with a good-paying job, he doesn’t have to worry about losing his policy or not getting comprehensive medical coverage.  But to a woman who can’t afford to lose her job to have a baby, or someone with a mental health problem who can’t get relief for his suffering, or someone with an individual policy living constantly in fear that his or her insurance will get revoked precisely when they need it, these are issues of “cosmic importance.”  Anyone saying otherwise is ignorant.

And yet the Governor will have no problem holding these bills, and these people, hostage.  His buddies at the Chamber of Commerce probably don’t want him to sign them at all.  So he writes a pretty letter supporting health care reform, while denying the very same measures to his own constituents.  And national media types call him a “bold leader.”

Tom Campbell’s Kind-Of-Interesting But Just-A-Mask-For-Friedmanism Health Care Proposal

Tom Campbell, among all the Republicans in the gubernatorial field, has at least been willing to lay out detailed plans for how he would fix the state.  Typically this manifests itself as the same old Hooverism.  But his health care plan at least gets points for creativity.

GOP gubernatorial hopeful Tom Campbell released a unique health care proposal Thursday that would redistribute $42 billion in federal and state funds already spent on health care in California to buy private health coverage for everyone in the state who’s “involuntarily” uninsured.

Under the former congressman’s plan, the funds would cover an estimated 2 million such people in addition to the 7.6 million already receiving public health coverage under the state Medi-Cal and Healthy Families programs.

“The astounding conclusion,” Campbell writes in his proposal, “is that, using only the money already being spent by the federal and state governments for health care in California, we could buy free market health insurance currently available and cover all involuntarily uninsured in California, and still have more than $700 per person left over!”

Instead of dedicating funds to services for the poor or children, Campbell would split the state into regions, and allow insurers to bid against one another to cover everyone in that region who earned below a certain level, along with everyone denied coverage for a pre-existing condition.  Insurers wouldn’t bid on price, but quality of coverage – the money would be fixed, and insurers would bid against each other based on what they would cover and at what rate.

I’m wondering why any insurer would bid for this right.  They deny people with pre-existing conditions because they are more likely to use health care, increasing their medical loss ratio.  And the poor are more likely to need health care treatment based on lifestyle and environment.  And the kicker to Campbell’s plan is, if nobody bids, the status quo would remain in place for that geographical area.  So basically, Campbell is touting a big plan that would do… nothing.  And he wouldn’t embark on it if the federal government enacts their own plan.


Really, that interesting, if impossible (try getting a federal waiver to set it up and face Congressmembers with interests in protecting SCHIP and Medicaid), proposal is a cover for Campbell’s apparent agenda – to permit the interstate sale of insurance and to bring up the canard of tort reform as a panacea.  Medical malpractice is an insignificant percentage of total health care costs and states which have embarked on major medmal reform, like Texas, have seen no change in health inflation.  As for the interstate sale of insurance, you can do it now – only you’re responsible to comply with the laws of the state in which you sell.  This proposal would allow insurers to only be responsible to the regulations of the state where they are based.  Tom Campbell wants to do for the health insurance industry what this kind of proposal did for the credit card industry – send all insurance companies to a small state with no regulation, and gut all state-based regulation in the process, leaving California’s insurance customers at the mercy of the laws of South Dakota or Mississippi.

To his credit, Campbell wants to remove the anti-trust exemption on the insurance industry.  But really, that’s a means to an end here.  However, there is a point of consensus between conservatives and liberals to do away with the McCarran-Ferguson Act, that offers that anti-trust exemption.  Bills to this effect were just introduced in Congress.  If Campbell wants to talk them up to the California GOP delegation, go ahead.

Insurance Companies Make Out Like Bandits In Healthy Families Legislation

Last week I discussed the legislative fixes being made to save half a million kids from being dropped from the Healthy Families rolls.  This fix would push more costs onto the families, making the program less affordable and the coverage stingier, and would extend a gross premiums tax on insurance companies, which was set to phase out in October, at a lower rate than they are now paying.  Keeping that tax at the same rate would have spared families from increased premiums and co-pays.

But saving the program is saving the program, and yesterday the State Senate took the first step.

State lawmakers pushed forward Wednesday with a $196-million plan to keep nearly 700,000 children from being yanked off a government health insurance program for the working poor.

The state Senate passed a measure to create a new tax on insurance companies and bring in federal money to rescue the decade-old Healthy Families program, which had been cut deeply in recent months as lawmakers scrambled to balance the state budget.

Assembly officials expressed confidence that they would garner the needed two-thirds vote in the lower house, where the bill is expected to be taken up today. Administration officials said Gov. Arnold Schwarzenegger would sign the measure.

Again, not quite right.  The “new tax” on insurance companies is an extension of an existing tax at a lower rate than before.  This is why the insurance companies support the bill; they’re getting taxed at a lower rate, keeping 600,000 kids on their insurance rolls, getting the families to pay more, and being credited with saving the program.  It’s a neat trick.  Not only that:

The new tax would replace an existing 5.5% levy set to expire in October, prompting some lawmakers to quip that the new levy is actually a tax reduction. It would expire at the end of next year, and the insurers would be reimbursed for most of their cost.

“Of course the insurance companies want this — it won’t cost them a penny,” Aanestad said.

Keeping the premiums tax in place does net $97 million in federal matching funds, which certainly helps matters.  And keeping the program alive helps children in tangible ways.  But this is a very strange conception of “shared responsibility,” when the families participating in the program will have to pay more for premiums and co-pays, with less coverage overall, and the insurance companies get a lowered tax, which they will get reimbursement for down the road.

And the craziest part of all of this is that Sam Aanestad of the Yacht Party, while admitting this is a lowered tax and that insurers will not pay anything in the final analysis, voted against the bill because it “raises taxes on California business.”

“Who pays is the bottom line here,” said state Sen. Sam Aanestad (R-Grass Valley), who voted against the bill.

Sam Aanestad in this paragraph should read Sam Aanestad from the other paragraph.

…the Assembly passed this today without a no vote.  The Governor will sign.  Insurers will get their tax cut.  Huzzah.

Henry Waxman To Insurance CEOs: Show Me The Money

(Disclaimer: I have been hired as a blog fellow for Brave New Films and their Sick For Profit campaign, exposing billionaire health insurance CEOs and their profiting off of denying care.  Join the campaign on Facebook)

It’s a little shocking that the story of health insurance CEO largesse hasn’t been told, by and large, by the Congress in the debate over health care reform.  The debate has covered public options and “death panels” and Nazi comparisons and cost curves without addressing the fact that for-profit health insurance companies add almost nothing of value to access or quality of care and exist only to skim off the top and keep as much of their premiums as possible.  And they rake in giant profits at the same time.  Now Henry Waxman, no stranger to Congressional investigations, wants to put a dollar sign on those profits, specifically what money goes where.

Two powerful House Democrats have sent a letter to insurance companies asking them to provide detailed information about their conferences and retreats, executive pay, and other business practices […]

The Waxman-Stupak letter asks companies to provide, by mid-September, the compensation packages of any employee or officer who made more than $500,000 in any year from 2003 to 2008. It also asks the companies to list all their board members and their compensation.

The congressmen also want information “listing all conferences, retreats or other events held outside company facilities from January 1, 2007, to the present.”

In addition, the letter demands more basic information, such as the companies’ total revenues, net income, and total dividend payments, as well as premium revenue, sales expenses and profits.

It seems like, especially considering the prominence of the subject of health care over the past few months, this should be public information.  Here’s the full letter.

We already have a pretty good understanding of the profits of the insurance companies, as well as the rewards of their CEOs, in salary, options, and additional perks.  That was the subject of Sick For Profit, which in the first installment exposed Steven Helmsley, the CEO of United Health Group, and his $13.2 million in compensation in 2007, his $6 million dollar home in Minnesota, and his $744 million in unexercised stock options ($127 million of which he exercised in 2009).  But Waxman asking for this information puts it into an investigation.  And that gives it a different feel.  He can use subpoena power.  He can haul the CEOs before the committee.  He is in the best position to contrast the 47 million people without health insurance, and the 40 million who are underinsured, with these obscene profits.

This could get interesting.

Oddly, Nobody Protests This Health Care Forum

This week, Remote Area Medical, an organization that got its start providing health care services to the impoverished in the Third World, descended on Inglewood to provide those same services to the most disenfranchised group, from a medical care standpoint, in the industrialized world – the uninsured and underinsured in America.

They came for new teeth mostly, but also for blood pressure checks, mammograms, immunizations and acupuncture for pain. Neighboring South Los Angeles is a place where health care is scarce, and so when it was offered nearby, word got around.

For the second day in a row, thousands of people lined up on Wednesday – starting after midnight and snaking into the early hours – for free dental, medical and vision services, courtesy of a nonprofit group that more typically provides mobile health care for the rural poor.

Like a giant MASH unit, the floor of the Forum, the arena where Madonna once played four sold-out shows, housed aisle upon aisle of dental chairs, where drilling, cleaning and extracting took place in the open. A few cushions were duct-taped to a folding table in a coat closet, an examining room where Dr. Eugene Taw, a volunteer, saw patients.

These were not only uninsured patients, over 1,500 in the first day alone, but underinsured patients who cannot get the services they need with their coverage.

No cable news outlet discussing health care reform and the town halls around it ever get around to mentioning this reality.  In the poorest areas of this country, health care access is so nonexistent that people will wait around for days in their cars, driving for sometimes hundreds of miles, to find a volunteer clinic that they now use as their primary care physician.  South Los Angeles lost one of its only health care providers when King-Drew Medical Center shut down a couple years back, and really nobody, outside of Remote Area Medical, has filled the breach.  This is an absolute tragedy, and at the end of the day, it costs our medical system far more than it would to cover everyone, because nagging problems only served by free clinics every couple years eventually find their way into the emergency room.  And the disconnect between this circumstance and those right-wingers yelling and shrieking across the country is striking.

The enormous response to the free care was a stark corollary to the hundreds of Americans who have filled town-hall-style meetings throughout the country, angrily expressing their fear of the Obama administration’s proposed changes to the nation’s health care system. The bleachers of patients also reflected the state’s high unemployment, recent reduction in its Medicaid services for the poor and high deductibles and co-payments that have come to define many employer-sponsored insurance programs.

Somebody should leak to one of the astroturf groups activating the right about these town halls that there will be a major Congressional event over at the Forum in Inglewood, and then sit back and watch their face sink when they show up to protest and instead encounter the horrors of this broken system.

CA-10: An Interview With Lt. Gov. John Garamendi

John Garamendi has been seeking votes in California for well over 30 years.  He first took a run for the Governor’s mansion in 1982, and was set to do so again in 2010 until the seat in CA-10 opened up, and he was inspired to return to Washington, where he served in the Clinton Administration in the Department of the Interior.  He has the most diverse record of anybody in the race, with stints at the federal level, the state legislature, and in two statewide offices, as the Insurance Commissioner and now Lieutenant Governor.  In our interview, we discussed health care, lessons learned from regulating insurance, No Child Left Behind, saving the NUMMI plant in Fremont (more on that from Garamendi here), and foreign policy in Iran.  I found Garamendi to come at issues in a very comprehensive and thoughtful way, and you can see this for yourself below.  A paraphrased transcript follows. (flip it)

DD: Thanks for talking with me today.

John Garamendi: My pleasure.

DD: So how’s it going out there on the campaign trail?

JG: It’s going very well.  Every day, I feel we’re moving along well.  You have everything being done that is normally done in these campaigns.  We have a strong volunteer grassroots organization committed to getting out the vote.  Phonebanking has started, we’ve hit about 30-40 thousand homes.  We’re walking in different communities.  We just had a meeting in Rossmore, with 300 people turning out.  So I think it’s going very well.

DD: Your last several campaigns have been statewide, with district-level campaigning being more retail, how are you finding it?

JG: To me, it’s exactly the same, only it’s done in a smaller area.  I’ve always believed strongly in retail politics.  The only difference is that after the event’s over, I don’t have to get on a Southwest Airlines plane.  We did an African-American church out in Fairfield over the weekend, same as any African-American church in Southern California or anywhere else.  It’s just easier for travel.

DD: OK, let’s hit some issues.  First off, health care.  August is this time where everyone’s making their feelings known about health care in their districts.  What are you hearing in yours?

JG: I am hearing a strong element for single payer, or Medicare for All.  As you may know, I’ve led that debate in this state for many, many years.  I’ve always found it the most efficient, most cost-effective way you can possibly do this.  Just send your premiums to the Medicare office.

So I hear a lot of individuals trending in that direction.  And some of the unions, the California Nurses Association, are also trending in that direction.  There is also a concern about the complexity of the legislation moving through Congress.  And people want to see at the very least a public option to compete with the insurance companies.  Also, with a lot of seniors, the drug issues concern them, both with fixing some of the issues with Medicare Part D and also maintaining what they like about Medicare.  So that’s the range.

DD: Would you vote for any bill that didn’t have at the least a public option that’s available from day one, without a trigger?

JG: Well, I’ve always been a strong voice for Medicare for All.  The fallback position is the public option.  That’s already a compromise.  And so the legislation had to have a public option, I can’t go any further away from that.  The other thing I want to express is that I understand insurance reform, which is a lot of this bill.  I was the main regulator for insurance companies in the largest state in the union.  So I bring a set of knowledge to this debate that not only doesn’t exist among my competitors, but doesn’t exist in Congress.

DD: Let’s talk about that.  Right now, insurance companies are regulated in the states, and so the regulations vary from one place to the next, and can be corrupted by local interests.  Do you support a federal role in insurance regulation?

JG: This is something that we have to figure out with insurance reform and with respect to financial regulation.  The regulatory mechanisms need some clarity.  It simply won’t work to write a law saying to the insurance companies, “Take all comers.”  They will not do it.  So you need a police force.  Someone to enforce that law.  Will that be federal, or based where it is now, at the state level?  That’s the kind of detail that must be worked out.  I mean, we’ve had auto insurance here in California that’s supposed to take all comers, and they find numerous ways to avoid that.  And of course, this is why I support Medicare for All.  You don’t have to worry about any of that.  But as long as we’re going with health insurance reform, I can add something to that process.

DD: What are the pluses and minuses of putting this in the hands of the Feds?

JG: If it’s a federal process, you’d have to set up a massive new federal bureaucracy.  In the positive sense.  But you have to have a police force, because otherwise, the insurers won’t do it.  That’s a major, expensive undertaking for the federal government.  There’s an advantage to the existing mechanism in that it already exists, like with Medicare or Medicaid.  However, you mentioned some of the problems with how the regulation changes depending on the state.  So both options have shortcomings.  Either way, if we have a bill based on insurance reform, it has to be dealt with.  And I’ve been dealing with these companies for eight years of my life.  I know how to do this.

DD: Medicare for All will apparently get a vote now.  Is that helpful?

JG: It’s enormously helpful.  It got pushed to the side of the debate for too long.  Medicare provides about 60% of the care in dollar terms already in this country, and it’s very popular.  If you bring the rest of the population in, on a per-person basis, the cost would decline dramatically.  The money in the private system is good enough to get this done and cover everybody.  And the other important thing is that Medicare allows individual choice of provider.  Whatever doctor you like, you can keep them.  Of course, we know that private insurance restricts your choice of doctor.  So this is the big lie in this debate, the idea that Medicare would have government telling you what doctor to pick.  That’s what happens right now.

DD: Let’s move on.  I noticed on your website you took a lot of time talking about the need to rebuild manufacturing.  We’re seeing this cash for clunkers program becoming very successful as an economic stimulus for the auto industry.  Is that the kind of incentive-based programs that we can use to bring back manufacturing to America?

JG: Not exactly.  The auto industry is not central, but it is important.  That’s why I’m trying to save the NUMMI plant.  1,200 businesses are direct suppliers to NUMMI.  The auto supply industry is one of the largest in America.  So cash for clunkers will help NUMMI.  But what I’m talking about with respect to manufacturing is an economic theory that I developed in the 1980s.  Basically, I figured that you need certain things to maintain the ability to lead as an economic power.  You need a world-class education system and a commitment to research and development.  Through both of those, you can create new things, with a high profit margin, whatever those things are, but new innovations that people find valuable.  Eventually, those new things become a commodity, and once that happens, like all commodities, it seeks the lowest-wage place to be made.  So those things get pushed off, and you have to create more new things, to keep feeding that engine.  So that’s what I’m talking about, high-end manufacturing.

DD: Couldn’t the NUMMI plant be retooled to serve as a place to manufacture those new things, be they innovations in solar or wind technology or new batteries?

JG: Well, we tried this a few years back.  I endorsed a bill in the legislature to provide a specific exemption for sales tax on manufacturing equipment to retool the NUMMI plant for hybrid vehicles.  And that probably would have been enough to keep NUMMI open.  But it didn’t pass.  Right now, what we’re doing is putting together a package for NUMMI of incentives that will hopefully keep them in California.  But it’s more complex than that.  This is like a divorce.  You have GM and Toyota fighting over who owns what widget on the line.  So there are legal issues in play now.  I think we can get it done, because that’s a very efficient plant, one of the most efficient in the country.  But we have to manage this divorce.

DD: Education is another issue you talk about a lot.  The Department of Education just put out this Race to the Top program to offer money to the states with good outcomes, but they are restricting the funds to states which incorporate student testing into teacher evaluations, and because California doesn’t do that, they don’t qualify.  What are your thoughts on that, and this larger divide between education reformers and groups resisting their reforms?

JG: My question about it is basically, what is the equation between the test and teacher evaluations? Are we talking about just the test score? In that case, do I get to choose the students? Because the students and their backgrounds are a contributing factor to their performance. So it’s a complex equation. There’s a socioeconomic element to it. And it’s very difficult to do to take everything into account. I don’t think that testing should be the sole measure of a teacher evaluation. There are multiple factors. My daughter’s a kindergarten teacher, and this year she got to school and there were a lot more kids in her class. So is that a factor? I think we need to evaluate teachers, but we must be fair.

DD: Do you support a reform like paying teachers more to go into poor-performing inner city areas?

JG: I’ve always supported reforms like that. I put up a bill in the 1980s to pay more to math and science teachers, to make sure we were attracting the best of them. And I support sending good teachers into the inner city. We have to pay our teachers better if we want to get the best outcomes.

DD: We are having such a tough time in California, what can the federal government do to alleviate some of the burden here where we are destroying our social safety net during a deep recession?

JG: Well, just to go back to education, one thing the federal government can do is fix No Child Left Behind. It was a great concept, but not good in detail. The reauthorization is coming up, and the Feds had better fund it. You can’t place a burden like that on the states and expect them to deliver. So funding, and some reform of the law, has to get done. I don’t think testing should be the only evaluation of students. There’s a place for it, but we’re building a nation of robots by teaching to the test. I have significant concerns about No Child Left Behind that need to be addressed.

DD: What about beyond that. Would you support a second stimulus focused on the states?

JG: I don’t know whether there will be a second stimulus. But the problem is pretty elemental. California is the 7th, 8th-wealthiest place on Earth. We have made a decision, and it was a decision, not to invest in education. We have plenty of money to fund it, but we made the decision not to. The leadership has refused to use that wealth in the greatest resource we have, and that’s our education system. It’s clear to me that the federal government cannot substitute for the effort that California must make for themselves. We need investment, coupled with serious reform, to break the gridlock. Voting to tax students by raising college rates is just insanity. And the regents and trustees refused to support legislation for an oil severance tax to fund higher education. I brought it to them, and they wouldn’t support it. We are the only oil producing state with no tax on the natural resources coming out of our ground. The oil companies have been able to take it for free for over a century. It’s madness.

So the federal government cannot substitute for California. But I’ll fight to bring money back to the state. First by funding No Child Left Behind. And also, there’s the issue of medical services. The formula for state participation in Medicaid in California is 50-50, an even split between the Feds and the state. In other big states, that ratio is different. In Illinois, New York, it’s more like 60-40, 70-30. Getting a better split in that formula represents a huge amount of money for California. And there are numerous formulas like that. So experience counts in understanding all that.

DD: OK, final question. On your website, I noticed very strong language supporting Israel, and also warning Iran not to continue with their alleged nuclear program. And you advocate for stopping shipments of refined oil to Iran if they refuse to cooperate. Now, I’m assuming that was written before the most recent uprising.

JG: It was, yes.

DD: Do you still believe, given the events over there, that it’s a good idea to stop refined oil shipments, when it may hurt not the regime, but the very people in the streets who are resisting it?

JG: There’s no doubt that the effect of an embargo would hit the economy and the people. That’s what it’s designed to do. I’ve thought long and hard about this, after watching the events take place, and I still believe in the concept. What you have over there is the current government’s legitimacy being questioned. Does that mean they are more willing to negotiate on the nuclear program, to bring something tangible to the people? We don’t know. So I think you have to pull together the interested groups, and that’s Europe, and Russia, Pakistan, the Arab states, they might be more interested than us. And you create a larger coalition to change the behavior of the government. The uprising actually helps in that regard. And like in any negotiation, you have to have a big stick. So I would not drop the embargo possibility. And again, all of this is down the road a piece. Now another big stick would be bombing their facilities, and I think there are some unadvisable consequences to that. So I’d rather use the other stick.

DD: Thanks so much for talking to me today.

JG: Thank you.

Health Care Bills Advance In Assembly

The Senate Health Committee held its first hearing on SB810 (Leno), the single-payer health bill.  While I’ve made my belief in the inevitable problems of states trying to fund health care when they cannot deficit spend well-known, if I was on that committee I’d go ahead and vote for it.  But I recognize the need to strengthen the broken health care system on all fronts, given the political realities that the Governor has vetoed single-payer multiple times in the past, and that the Republicans will never sign off on the funding, and so even if by some miracle the Governor put pen to paper we would have to wait until 2010 for full passage, and another year for implementation.  In the interim, a number of very interesting health care reforms have cleared the Assembly Health Committee already, and progressives should take notice of them.  Anthony Wright has some of the details.

The Assembly Health Committee on Tuesday approved a number of key health consumer protections. The measures would expand guarantees of coverage to Californians who are underinsured, uninsured or, in some cases, just plain inadequately served by their health care providers.

One of the bills would sharply increase civil fines in response to the insurer practice of retroactively canceling policies after patients become sick and need expensive treatments. Another would address a vast, and quickly expanding, demographic of the uninsured–young adults transitioning between school and careers that offer financial stability and benefits.

Yet another would require insurance brokers and employees to reveal their financial interests-such as paid commissions – in selling certain health care policies. One measure would require private providers to cover more of the costs of doctor-ordered medical equipment, something Medicaid and MediCal already do.

See the post for the full details on AB1521 (insurers revealing their commissions), AB730 (big fines for rescissions), AB29 (raising the age limit for dependent coverage from 19 to 26) and AB214 (requiring health plans to cover durable medical equipment).  All 4 would have an immediate and tangible benefit for Californians, and all are common-sense reforms.  Fining rescissions would attack the inequities in the system and prevent fraud, as would the agent commission rule.  Raising the age limit would provide stability for those young people transitioning from college to starting a career, and adding protections for what is insured also adds stability (the fact that people can be made to pay for their own wheelchair is kind of nuts).  None of these deal with the long-term cost drivers that bust state and federal budgets, and none deal comprehensively with the crisis of the uninsured.  But all of them help, and we need to press forward on all fronts right now.

California: Ground Zero For The Health Care Crisis

On Monday morning the final regional White House forum on health care reform will be held in Los Angeles and at satellite sites throughout California, in San Diego, Oakland and Clovis.  Details can be found at HealthReform.Gov.  California certainly figures as a good place to talk about health care reform; a study released today by Families USA shows that 37% of all Californians were without health insurance during all or part of 2007 and 2008.

About 12.1 million Californians, or 37% of non-senior residents, were uninsured for at least one month during 2007 and 2008, Ron Pollack, executive director of Families USA, a Washington, D.C.-based group, said Thursday.

Most of them were uninsured for at least six months, Pollack said, and more than 80% of them were in working families. Minorities were more likely to be uninsured; 53% of Latinos and 38% of blacks were uninsured during the two-year period; for whites, 25% were uninsured.

They were among the 86.7 million U.S. residents who went without insurance for at least one month during the same two-year period, according to the organization’s count.

The legislature is working to make sure this number doesn’t get any larger.  They passed a bill yesterday, AB23, allowing workers laid off from small businesses with under 20 workers to apply for the same health insurance subsidy that workers in larger firms can to retain COBRA, as part of the federal stimulus package.  Of course, that would impact 60,000 to 100,000 Californians, which is a drop in the bucket given these latest numbers.

Our broken health care system does not merely have an effect on the margins.  A near-majority of Californians face this crisis in a very direct way.  And with the recession only getting worse here, and slipping into Depression in some areas, something must be done as soon as possible to remedy this, both for fiscal reasons and reasons of basic humanity.