May 7, 2010 | Christina Jewett

The New America Foundation released a report this week that tackles everything from sugary drinks to medical malpractice in suggesting how the state could save $300 billion on health care over the next decade.

Insurance Commissioner Steve Poizner

There were no signs that the nonpartisan group was attempting to avoid wading into the race for the next governor.

But their report points out that the agency operated by gubernatorial candidate Steve Poizner is the state’s weaker health insurance regulator. The Department of Insurance is so inferior, the report suggests, that its health insurance responsibilities should be picked up by the Department of Managed Health Care, which now primarily oversees HMOs.

The report is careful to take the long view of how the Department of Managed Health Care emerged as the state’s scrappier watchdog than the Department of Insurance: “These two regulatory agencies are the product of changing political circumstances and marketplace trends during the past half-century,” the report says.

But it pulls no punches: The DMHC should take over the functions of the DOI, the report says.

It characterizes Poizner’s agency as one that allows insurers to offer “lower value products with fewer regulations” compared to the DMHC’s “higher value products with strong consumer regulations.”

(Perhaps this explains why Wellpoint turned to Poizner’s team for the go-ahead for a 39 percent rate hike? To their credit, the Department of Insurance found an error with the request that led to its withdrawal.)

The report continues:

Therefore, these agencies should be merged, standardizing their regulations so that all consumers of healthcare in Californiacan be equally and fairly protected. This also may be a precondition for implementation of federal healthcare reform, which will require efficient coordination and policy implementation at the state level.

The best plan would be for Californiato transfer the CDI’s regulatory authority of health insurance to the Department of Managed Healthcare. Insurance companies then would be licensed under DMHC, which might need to provide these services through a subsidiary organization. Having all health insurance regulation under the DMHC likely would lead to equalized benefits and uniformity in administrative and quality-of-care programs, claims practices, and regulations regarding financial solvency.

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