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Insurance conflict of interest for speaker?

February 4, 2011 12:00:00 AM PST
As state lawmakers prepare to investigate Blue Shield's proposed rate hikes, a new controversy has surfaced: An insurance industry fundraiser for one of the state's most powerful politicians.

Usually when something stuns the public, Sacramento lawmakers are quick to call hearings. But in the case of the Blue Shield rate hike, critics are wondering whether money is buying influence.

After weeks of public outcry over rate hikes of as much as 59 percent on individual health insurance plans, Blue Shield finally agreed to delay the move this week.

Now critics are calling on Sacramento to bring in company executives and are demanding an explanation.

"This is probably the largest rate hike in California history for health insurance," said Jamie Court, president of Consumer Watchdog. "So I think there's no question that the legislature should be holding hearings. I think they should be subpoenaing the CEO of Blue Shield."

Saying he's just as outraged as the public, state Assembly Speaker John Perez (D-Los Angeles) insists he plans to hold hearings.

"We absolutely are. I think you see our health committee already starting down that process," said Perez.

But the state health committee chairman's office says there are no firm plans, let alone a hearing date.

That leaves some questioning how committed Perez is to holding Blue Shield's feet to the fire, particularly after the insurance industry threw a $100,000 fundraiser for the speaker last week at a Sacramento restaurant.

"He either needs to give back the money or he needs to hold hearings very quickly because the specter of impropriety is great," said Court.

When Perez was asked about the fundraiser, he said it's not a factor.

"Yes, we can be fair. It's not only the assembly's role in doing this oversight, but the Senate's role," said Perez.

In the past, Perez has voted in support of legislation AB 2578, which barred insurers or health care service plans from increasing rates without approval of their regulator.

Perez also voted for SB 1163, which requires health insurers to submit to their regulators a justification for any premium increase at least 60 days prior to implementing. That piece of legislation, which was passed in the assembly and signed by then Gov. Arnold Schwarzenegger, also required a certification by an independent actuary stating that the rate increases are reasonable.

"We are going to be very aggressive and the speaker is going to be very aggressive in protecting the consumers first," said state Senate President Darrell Steinberg (D-Sacramento).

The state assembly last year quickly and famously used a subpoena threat to call in the CEO of the company that owns Anthem Blue Cross to justify, under oath, a 39-percent rate hike. The company later withdrew it.

"The question is one that is disappointing to me, Mr. Chairman," said Leslie Margolin, president of Anthem Blue Cross, on February 24, 2010.

It should be noted that Blue Shield is not connected to Anthem Blue Cross, a totally separate company.

Calls to Blue Shield and its chief lobbyist who put together the fundraiser were never returned. Blue Shield has only delayed its rate hike by 60 days, so the clock is ticking for the legislature to take any action.