California Insurance Commissioner Dave Jones has irritated the insurance industry and surprised public-policy analysts by hiring Consumer Watchdog, a vocal insurance industry critic, to assist in reviewing health insurance rate increases, the Los Angeles Times reports.
In a one-year contract worth up to $88,000, Consumer Watchdog will supplement the rate review process already done by the insurance department.
From the Los Angeles Times:
The insurance industry expressed dismay that the state enlisted its longtime nemesis to help review rate increases, and some experts questioned whether it's necessary to further antagonize insurers at a time when state officials are trying to work closely with the industry to implement a massive healthcare expansion.
Public-policy experts also scoffed at the arrangement.
"Their very aggressive stance against insurance companies raises serious questions about a conflict of interest," said Jessica Levinson, a Loyola Law School professor and expert on government ethics. "You want an independent researcher."
Patrick Johnston, president of the insurance trade group California Assn. of Health Plans, said, "Any review of health plan rates should be conducted by independent, impartial consumer groups that do not have political conflicts of interest and financial motivations." ...
(I)n an interview, Jones defended using grant money from the federal healthcare law to hire Consumer Watchdog.
"I think it's important to have the consumer perspective, but at the end of the day we make our own determination," Jones said. "This grant funding is a drop in the bucket compared to the hundreds of millions of dollars health insurers and HMOs have on their side. I think ordinary Californians know the deck is stacked against them."
Jamie Court, president of Consumer Watchdog, said the group's proven track record in challenging insurance company practices made it an ideal choice for the state. ...
"We are the foremost expert on health insurance rates," Court said. "This grant allows us to pull back the curtain and show how the wizards at Anthem and other companies are manipulating Oz. We want to prove that rates are too high."
That approach by Consumer Watchdog troubled some observers.
"It's like asking one of the Dodgers to umpire a big game for the San Francisco Giants," said Dan Schnur, director of the Jesse M. Unruh Institute of Politics at USC. "Consumer Watchdog is a very well-respected organization, but the commissioner is clearly going out of his way to predetermine the outcome."