The revolving door between government regulators and the industries they oversee is a time-honored tradition that has been well-documented at the local, state and federal levels. Lobbyists and corporate executives shuttle effortlessly between not-so-lucrative positions in government and high-paying positions in the private sector.
The law does little to impede this flow back and forth that gives moneyed interests inordinate influence beyond what their cash can buy during the electoral process, perhaps because it is not uncommon for lawmakers themselves to make the journey. The revolving door is facilitated by government arrangements to tap the private sector’s expertise for advisory panels, “independent” studies, testimony before the Legislature, and other collaborations.
But there are limits to what government observers can tolerate and last week, apparently, a line was crossed when the state Department of Insurance tapped a well-connected, knowledgeable source to advise it on healthcare rates.
The industry was apoplectic. Whatever happened to neutral, unbiased decision-making, they wondered? “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,” Patrick Johnston, president of the insurance trade group California Assn. of Health Plans, told the Los Angeles Times.
Like the mythical jurist-as-impartial-umpire conjured up by U.S. Supreme Court Chief Justice John Roberts at his confirmation hearing, the impartial government adviser was venerated by critics who wondered aloud about Consumer Watchdog’s inherent bias.
“Their very aggressive stance against insurance companies raises serious questions about a conflict of interest," Jessica Levinson, a Loyola Law School professor and expert on government ethics, also told the Times. “You want an independent researcher.”
Consumer Watchdog President Jamie Court dismissed the complaints, saying her group is the “foremost expert” on health insurance rates. Indeed, it is, which is why they have sued insurance companies multiple times, and, according to the group, saved California ratepayers $2.3 billion since 2003.
The Department of Insurance, which has no power to reject a health insurance company rate increase, can jawbone in public, but not do much else. That might change next year.
Jones and Consumer Watchdog founder Harry Rosenfield were instrumental in putting an initiative on the November 2014 ballot that would give the commissioner power to regulate health insurance rates similar to what it already has when it comes to auto insurance.
Rosenfield also wrote the 1988 ballot measure that required auto insurance companies to get the approval of state regulators before raising rates. A second part of the initiative allowed consumer groups to challenge rate requests and get paid for it. Consumer Watchdog is the only group since 2008 to collect ($5.6 million) for that service under the system, according to California Watch.