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California Insurance Commissioner to Gain More Power from Federal Healthcare Law

One of the candidates — Democrat Dave Jones or Republican Mike Villines — will have a chance to set up state programs as part of the healthcare overhaul.                     

Reporting from Sacramento — Two state assemblymen not much known beyond their districts are vying for a statewide office that has ample authority over automobile, home and life insurance coverage and is getting more power from the landmark federal healthcare law.

The winning candidate for insurance commissioner — either Democrat Dave Jones of Sacramento or Republican Mike Villines of Clovis — will have a chance to help set up state programs as part of President Obama's national healthcare overhaul.

The commissioner runs the California Department of Insurance, which oversees a $124-billion market. As one of the larger state agencies, it has an annual budget of $150 million and 1,100 employees.

And because the agency licenses 340,000 insurance professionals and more than 1,500 companies to ensure that customers are treated fairly and claims are paid on time, both candidates have said they won't take campaign money from the industry.

How the commissioner regulates the insurance industry affects business and individuals "every day," said Mark Savage, a senior attorney at the West Coast office of Consumers Union, publisher of Consumer Reports magazine.

Modern market economies depend on affordable and available insurance to help people deal with risk and plan for their future, Savage said.

As candidates, both Jones and Villines tout their pro-consumer credentials. But just what that means is a function of their opposing political philosophies.

Jones, an activist lawmaker, said he would be a strong regulator who would keep insurers on a tight leash. "The biggest issue is making sure that California consumers and California businesses are protected against abusive insurance industry practices," he said.

Villines wants to limit government intervention in the market and use his office to bring down costs by fostering competition. "If the costs are too high or the providers too few," he said, "the businesses that are now struggling to keep their doors open in this economy will have one more reason to move their jobs to another state."

Jones' and Villines' views particularly diverge on health insurance, though both support a new California law that creates a state-run exchange to provide coverage for people who can't get private insurance.

Jones would go further to keep a lid on rates and provide support for the state's 6 million people without health insurance. In the past, he has authored bills — never passed — to create a Canadian-style, government-run single-payer system.

This year, a Jones-sponsored bill signed into law by Gov. Arnold Schwarzenegger bans price discrimination against women in the individual health insurance market. Villines opposed the measure because he said it would increase costs.

Jones also wants to curb skyrocketing premiums for individual health insurance with proposals to give the commissioner the same power to approve healthcare rates that the commissioner now has over most types of property and casualty insurance.

"I believe this is one of the missing pieces of U.S. health reform," he said.

Villines supports creating a strong, government-backed healthcare safety net to care for people who need help, while maintaining "a vibrant private sector" for for-profit companies. "We shouldn't be afraid to have more people insured," he said.

Villines also would monitor insurers closely to make sure they only cancel a sick person's coverage if the companies can prove that the insured submitted a seriously fraudulent application.

But overall, Villines said, he opposes the president's health insurance plan, especially its mandate that all individuals participate in the program.

With less than three weeks until election day, the leaders of three major consumer organizations have endorsed Jones.

Harvey Rosenfield, author of Proposition 103, the 1988 initiative that created the job of elected insurance commissioner, personally endorsed Jones. His Santa Monica group, Consumer Watchdog, is prohibited by law from making similar endorsements.

Amy Bach, executive director of San Francisco's United Policyholders, also personally endorsed Jones. However, Bach noted that Villines canceled three appointments to meet with her.

The Consumer Federation of California in San Mateo endorsed Jones. It gave him a 99% pro-consumer voting record on the group's "legislative scorecards" and gave Villines a 15% score.

Jones and Villines pointedly distanced themselves from the politically powerful insurance industry by refusing to accept campaign contributions from insurers.

Jones returned $8,400 in contributions collected earlier from insurance companies by his 2008 Assembly committee. In contrast, Villines transferred $54,300 in previous insurance contributions to his insurance commissioner's campaign, state filings show.

Villines said he had "not taken a penny from insurance companies since I announced I was running" for insurance commissioner in June 2009.

Villines, though, is benefiting indirectly from insurance company financial support.

Various companies contributed to a political action committee controlled by the California Chamber of Commerce. The committee is airing independent television advertisements in praise of Villines and in opposition to Jones.

In September, the committee spent nearly $2 million on a pro-Villines TV blitz. This month it reported spending $280,000 on "media production" for ads against Jones.

Recent campaign finance report showed contributions from insurance companies totaling $1.26 million. The largest was $525,000 from George Joseph, chairman of Mercury General Corp.

Jones said he expected the chamber's TV campaign against him to cost more than $5 million.

The chamber said its expenditure against Jones was part of its "long history of electing pro-jobs candidates."

Villines said he had no control over what the chamber did.

For his part, Jones held a fundraiser last month in his hometown of Chicago that was attended by Florida lawyer Norman Taplin and his associates, including former insurance executives and regulators.

Taplin said on his website that "he utilizes his 30 years of experience as an insurance regulatory attorney to give his clients privileged access to the country's insurance/regulatory decision makers."

Jones said he received the contributions as part of a larger breakfast fundraiser. He said he was unaware of the background of Taplin and the other contributors until getting an inquiry from a reporter.

On Oct. 7, Jones returned $5,000 in contributions to Talin and his associates.

Contact the author at: marc.lifsher@latimes.com