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Jerry Brown, state Assembly turn up the heat on California’s health insurers

Scrutiny of California's health insurers intensified Thursday with both Attorney General Jerry Brown and the state Assembly demanding more financial information from the industry.

Brown issued subpoenas to the state's seven largest health insurance companies: Aetna Health, Anthem Blue Cross, CIGNA, Health Net, Blue Shield of California, Kaiser Permanente and PacifiCare.

Brown, expected to announce his candidacy for governor in the next two weeks, said the information will aid an investigation into "possibly illegal" rate increases.

"We have been looking at these companies for a number of months and are very concerned that some of them are unjustly raising premiums and denying payment of legitimate claims," Brown said in a statement.

Brown's subpoenas focus on "pay-for-service" plans. Brown said the same companies were subpoenaed last month for information on their managed care plans.

Patrick Johnston, president and chief executive officer of the California Association of Health Plans, reacted to Brown's move by sympathizing with public frustration but noting that insurance premiums are driven largely by the "skyrocketing cost of medical care."

To avoid confusion and delay in supervising health insurance, Johnston said, regulation of the industry should be left to state agencies currently charged with that responsibility – the Department of Managed Health Care or the Department of Insurance.

The Assembly, meanwhile, targeted Anthem Blue Cross for a subpoena Thursday to compel release of information about compensation to its California executives and internal discussions on raising rates.

The action came two days after Anthem Blue Cross President Leslie Margolin and other company executives were grilled by the Assembly Health Committee about plans to raise premiums by as much as 39 percent on hundreds of thousands of Californians.

The Assembly Rules Committee split along party lines on a 6-4 vote to issue a subpoena but to delay service for two weeks, giving Anthem time to voluntarily produce information about executive compensation and internal rate deliberations. Republicans voted no.

Natalie Cárdenas, of Anthem, said the firm had been responsive to a request to produce records for the health committee hearing and is willing to provide supplementary information.

"I don't see any need to subpoena us for this information," she said.

Assemblyman Dave Jones, a Sacramento Democrat who chairs the Committee on Health, said that Anthem had "gamed" the system by releasing documents the night before Tuesday's public hearing.

Republicans accused Jones of grandstanding by seeking issuance of the first Assembly subpoena since 2000.

"I think this is all about running for higher office," said Assemblyman Ted Gaines, R-Roseville.

Jones countered that lawmakers have a responsibility to protect the interests of up to 800,000 Californians who face a massive rate hike from Anthem.

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