It’s been anything but a leisurely transition to the world of state politics for new state Insurance Commissioner Steve Poizner, a former Silicon Valley entrepreneur who succeeded John Garamendi in the post in January. Poizner has participated in insurance fraud raids around the state, directed aid to farmers hit by this winter’s crop freeze, and overseen investigation of the state’s largest workers compensation insurer, the State Fund, where top leaders recently left amid charges of mismanagement and conflict-of-interest issues. On the occasion of his 100th day in office, Poizner stopped by the Los Angeles Business Journal last week to provide an update and lay out his goals for the department for the remainder of his term.
Question: Have you been surprised by how quickly your first three months in office have gone by?
Answer:
I thought I’d spend a big chunk of time putting together my executive team and just meeting all the people. The department has more than 1,300 employees, 500 of them here in Los Angeles. We’ve done that, but also had to put out a few fires in between. My second full day on the job I was here in L.A. with the District Attorney Steve Cooley, participating in one of the largest insurance fraud busts in the history of the state, arresting people who were staging auto accidents and over-billing insurance companies by the tune of millions of dollars.
Q.: Then there’s the situation with the State Fund, the state agency that’s the insurer of last resort for businesses who can’t get a workers comp policy from a regular insurer.
A:
We’ve had to deal with a real meltdown there. The president was fired a few weeks ago and two board members resigned over conflicts of interest. I’ve sent in a team of auditors and fraud investigators, and we’re going over the place from top to bottom. I’ve run a number of companies, been involved with a lot of business organizations, but I’ve never seen anything like it. This was a state agency that was run like a fiefdom. They didn’t have a chief financial officer or a board audit committee. They have a $20 billion investment portfolio, but no chief investment officer.
Q: Why do you believe the problems have persisted for so long?
A:
Transparency has long been a problem with the State Fund. Until last year, when the legislature made clear that the insurance commissioner had full oversight, regulation really fell through the cracks. When they didn’t like what an auditor said they’d throw them out.
Q: There have been moves in the legislature and through the state initiative process to roll back some of the workers comp reforms. Do you intend to fight that?
A:
I’ll resist with all of my might any attempt to roll back the reforms. The reforms have worked to bring premium rates down from $32 billion in 2003 to $22 billion now. There’s a long ways to go to get rates down to the national average. But the reforms do need some tweaking. Some insurance companies, for example, have gone overboard in putting too many utilization reviews into the process so that it is taking too long for some workers to get medical treatment.
Q: As a businessman, is it your philosophy that the Department of Insurance should be run more like a business?
A:
I regulate around $120 billion in premiums each year, about 15 percent of the state’s economy. We’re the fourth largest insurance market in the world. I don’t believe that running a state agency is just like running a business. But business techniques can be used. My job is not to be the friend of the insurance industry. But it’s not to drive the insurance industry out of state either. My goal is to make the department the best consumer protection agency in the country.
Q.: What are your top policy priorities?
A:
We want to increase affordable options for insurance consumers. Ensure consumers are well informed about options and responsibilities. We’re working on programs, especially updating our Web site, to enable that. It’s also important to protect insurance consumers from bad actors and unfair practices. I am the chief insurance cop in California, and we’ve been doing that, in cooperation with district attorneys around the state.
Q.: What will be your role in the health care reform debate that is taking place in California and around the country this year?
A:
One thing that is frustrating for me is that the regulation of health insurance in California is so fragmented. In 49 states, you have one regulator over the entire industry. In California, HMOs are managed by the Department of Managed Care and the Department of Insurance regulates the rest; that’s only 30 percent of the market. I don’t want to get involved in things where I have limited potential for impact. That’s why I have decided to focus my attention on cost containment initiatives.
Q: What’s an example of a cost containment initiative?
A:
Electronic medical records is going to be a big focus of mine because it can really increase efficiency, improve care and reduce costs. This patient record-keeping on a clipboard has got to end. Health insurance companies can be encouraged to make some strategic investments, but they are unlikely to do it on their own. As insurance commissioner, I can pull the entire industry into a room to discuss this without having antitrust issues come up.
