2 Plans to Regulate HMOs Move Toward State Ballot

By DAVID R. OLMOS

April 23, 1996 12 AM PT

TIMES STAFF WRITER

Launching broadsides against California’s powerful managed health care industry, two union-sponsored coalitions said Monday they have gathered enough signatures to put separate initiatives on the state’s November ballot to sharply regulate HMOs.

The two similar but competing initiatives set the stage for a high-stakes political battle involving organized labor and the insurance industry and other business interests, a struggle sure to further fuel the emotional nationwide debate over how to reform health care.

The ambitious measures are an attempt to exploit public skepticism about the pervasive influence that the managed care industry is having on the practice of medicine in the United States. Helping to fuel this skepticism have been stories of HMO abuses, widely circulated in the media and by doctors, lawmakers, labor organizers and consumer advocates.

The initiatives cover some of the same ground but differ in several key areas. Both would ban financial incentives to doctors or nurses to deny or delay care, prohibit so-called physician gag orders and require second opinions before insurers could deny care recommended by a doctor.

The proposition backed by consumer advocate Ralph Nader and the California Nurses Assn., a labor union, would limit premium increases of health insurers, impose fees on health care mergers and hospital closures, prohibit HMOs from mandating that consumer grievances be settled by out-of-court private arbitration, and set up a nonprofit consumer watchdog board to advocate on behalf of patients.

The other group is led by the Service Employees International Union and two Bay Area health care advocacy groups, Neighbor-to-Neighbor and Health Access, which portray the nurses’ proposal as too extreme.

Both measures would ask California voters to pass judgment on a complex array of medical, insurance and economic issues that can be perplexing even to those who closely follow such matters.

Just as California has led the nation in its acceptance of cost-conscious health maintenance organizations--about 12 million Californians belong to such health plans--the initiatives represent the most sweeping effort to date to counter the influence of HMOs.

In California and dozens of other states, legislatures have passed numerous bills that impose increased scrutiny in piecemeal fashion over managed care insurers. Critics of the initiative say legislatures are the proper forum for deciding public policy on such complex issues.

But health care is changing so fast that action is quickly needed to correct “this rampage to erode quality of care, restrict the quantity of care and impose cost reductions to enrich the HMO executives at the top,” Nader said. “They are doing this at the expense of doctors and nurses, which is laying the seeds of a revolt here.”

The opposition--led by insurers and the California Chamber of Commerce--is expected to argue that passage of the initiatives will drive medical costs still higher for businesses and consumers and lead to excessive government meddling in medical care.

Opponents have charged that the measures are thinly disguised attempts to preserve union jobs while offering no new consumer protections. A provision dictating “minimum levels of safe staffing” at hospitals and nursing homes, for example, would help protect against further job losses among nurses and other union workers.

“Both measures will increase medical costs without necessarily improving people’s medical treatment,” said Allan Zaremberg, senior vice president of the California Chamber. “The ones who can least afford it, small employers, would suffer the most.”

Harvey Rosenfield, an author of the initiative backed by the nurses group, said he expects an insurance industry advertising blitz similar to the one that he faced over the successful California auto insurance reforms known as Proposition 103, which he authored.

But supporters have their own blitz planned. With theatrics that may give a hint of the campaign to come, proponents of the SEIU-backed proposition are kicking off their campaign today with rallies in Los Angeles and San Francisco

In both cities, doctors and nurses will arrive by ambulance and stretchers to deliver hundreds of thousands of signed petitions to registrar of voters’ offices, SEIU officials said. Supporters will carry signs “with photos of HMO victims.”

The initiative effort marks the second attempt by some key backers to force change on the state’s medical delivery system. The last attempt--Proposition 186, or the so-called single-payer initiative to create a Canadian-style health care system in California--was resoundingly defeated in 1994 after fierce opposition from insurers and other business interests.

Unions, consumer groups and health advocates tried to rally around a single initiative effort earlier this year, but had a falling-out over key details. Supporters split into two groups, each pushing its own version of the so-called “Patient Protection Act.”

The main dispute between the two is over the CNA-backed initiative to tax certain health care mergers, hospital closures and executive compensation. The measure proposes to raise between $2 billion and $5 billion annually through such taxes, with the funds to be used to pay for health care for the poor.

Bruce Livingston, executive director of Health Access, said the CNA measure is too extreme and that its tax provisions and consumer board invite attack by business interests as another big-government, more-taxes proposal.

Indeed, Myra Snyder, executive director of the California Assn. of HMOs, says the CNA proposition creates “another new bureaucracy to oversee HMOs” and would result in “tens of millions of dollars” in taxes for industry and higher medical premiums.

“The health plans won’t be hurt as much as individual citizens will be hurt,” said Snyder, a registered nurse who formerly headed the CNA union. If medical insurance premiums go up, she noted, some small businesses might be forced to drop coverage for some employees.

“They say they want to decrease the number of uninsured, but this will increase it,” she said.