Digest/kanter/23 inches/mike1st/mark2nd
Kaiser Seeks Rate Hike
Kaiser Permanente, the nation’s largest HMO, announced plans to seek double-digit increases in California insurance rates. The move is expected to ripple throughout the health care industry, as other HMOs, which have been seeking more-modest increases of their own, follow Kaiser’s lead.
The announcement comes less than three weeks after Kaiser startled the health care industry by reporting a loss of $270 million for 1997 the company’s first loss in its 50-year history.
Some small businesses could see their rates rise as much as 11 percent as a result of Kaiser’s plans a jump which some warn would spur small firms to drop health coverage for their workers and families.
Plan Imperils Subway
L.A. County Supervisor Zev Yaroslavsky announced he is launching a ballot initiative campaign to end local funding for the Metropolitan Transportation Authority’s proposed Metro Rail subway extensions.
If it qualifies for the November ballot and is approved by county voters, the measure would ban the use of the transit sales tax for any subway construction beyond the North Hollywood line currently being completed. The measure also would establish a five-member citizens’ oversight committee and require an annual independent audit of how the MTA spends the $880 million a year raised from the county’s penny-on-the-dollar transit sales tax. Yaroslavsky says the measure is intended to bring accountability to the MTA.
Deregulation Begins
After months of delay and confusion, the free market for electricity opened March 31 across most of California.
Under the system, dozens of new business enterprises are allowed to buy and sell electricity. The free market replaces a decades-old system under which monopolistic utilities took care of the state’s electricity needs, and prices were set by regulators as a result of which, California has some of the highest rates in the nation.
The new system immediately affects 10 million customers of the state’s investor-owned utilities, such as Southern California Edison and Pacific Gas & Electric, which together serve more than 70 percent of the state’s power customers. Customers of the state’s 30 municipal utilities, including the Los Angeles Department of Water and Power, are not yet participating in deregulation. Cities have until 2001 to decide whether to subject their utilities to open competition. Most of them are expected to do so, and are planning layoffs and asset sales to better operate in the free market.
Insurance Pioneer Dead at 85
Louis W. Foster, who built Woodland Hills-based Twentieth Century Insurance into one of the nation’s largest auto insurers, died March 29 of natural causes at UCLA Medical Center.
Foster changed the industry in the 1950s, when he began selling cut-rate auto insurance directly to consumers. The low rates were possible because the company didn’t have to pay agents’ commissions. The company also insured only good drivers; indeed, the business was started by targeting teachers, engineers and others deemed to be cautious drivers.
At his death, Foster owned 6 percent of Twentieth Century’s stock, a stake worth about $130 million. The company generates annual revenues of about $1 billion, has 2,200 employees and insures more than 1 million autos.
Tenet, Cedars-Sinai End Talks
Tenet Healthcare Corp. and Cedars-Sinai Health System announced they have ended talks that would have transferred management of two Tenet hospitals to Cedars-Sinai.
The two companies had been discussing for months an agreement under which Cedars-Sinai would have assumed management of Tenet’s 190-bed Century City and 225-bed Midway hospitals in West Los Angeles. But with those talks being terminated, Tenet will continue to operate both hospitals without change, although the two corporations say they will continue discussions on other potential areas of cooperation.
Restaurants Get Relief
L.A. restaurant owners with low health grades will be able to get a speedy second chance to raise their scores under a measure passed last week by the County Board of Supervisors.
Under a grading plan passed in December, restaurants receive an A, B or C grade from the county, depending on how many violations inspectors find. Those grades must be prominently displayed in the eating establishments. Restaurant owners have complained that even if they fix the problems immediately, they are stigmatized by having low grades posted for as long as four months while they wait to be re-inspected.
Under the new ordinance, restaurants will be able to get re-inspected within days by newly created “strike teams” of county environmental health inspectors. The teams also will conduct surprise inspections at the restaurants.
McDonald’s Executive to Market Movies
Brad Ball, the top U.S. marketing executive for fast-food giant McDonald’s Corp., has been tapped to head domestic marketing efforts at Time Warner Inc.’s Warner Bros. movie studio.
The post had been vacant since December, when former Warner Bros. marketing chief Chris Pula was dismissed after only 11 months on the job. The dismissal followed a series of flops for the usually successful film division, including “Father’s Day” and “The Postman.”
Ball is the second fast-food marketing executive to make the move to Hollywood. In 1996, Walt Disney Co. hired John Cywinski, a top executive at Diageo PLC’s Burger King, to be president of marketing for Buena Vista Pictures, the distribution arm of Disney.
Compiled by Larry Kanter
