California Legislator: Feds Will Step Up Involvement in Insurance Industry

By Don Jergler | January 25, 2012

“Listen to me now, understand me later.”

State Sen. Juan Vargas, D-San Diego, gave a well-received Arnold Schwarzenegger impression, chest heaving and heavy on the former California governor’s thick Austrian accent.

Vargas, a former president of external affairs for Safeco Insurance and formerly vice president of corporate legal for Liberty Mutual Group, on Tuesday discussed his experience in state Legislature working for worker’s compensation reform, his current bid for Congress and government oversight of the insurance industry at the IBA West Annual Meeting and Installation of Officers luncheon in San Diego.

Vargas, who served from 2000 to 2006 on the Assembly Insurance Committee, and was part of a bipartisan coalition to implement workers’ compensation reform, delivered the keynote address at the event.

Also speaking were IBA lobbyist John Norwood, who also represents the California Insurance Wholesalers Association, and IBA West Senior Vice President Steve Young. The two gave a dual presentation on health insurance exchanges.

Installed as 2012 officers of IBA West Inc. during the luncheon were: Steven Shea as president; Tabb Randolph, president-elect; Kenneth Turknette, secretary treasurer; Richard Dinger, IIBA director; and Clark Payan, CEO. Kerry Morris was installed as IBA West Service Corp. Inc.’s chairman, Payan was installed as president and Jim Cross was made treasurer.

The 2012 IBA West directors are: Bruce Callander from San Francisco, Jeffrey Chan from La Canada, Mitsu Diley from San Diego, Joel Geddes III from Modesto and Craig Williams from Pleasanton.

Vargas, who in 2010 was elected to the state Senate and represents the southern portion of San Diego County, portions of Riverside County, all of Imperial County and California’s U.S./Mexico border, recently announced his campaign for Congress. He’s vying in the Democratic primary for the 51st Congressional seat held by Rep. Bob Filnder, D-San Diego, against Sen. Denise Moreno Ducheny and John L. Brooks II.

“A lot of people at the federal level are making a lot of decisions and they don’t know what they’re doing,” Vargas said.

Vargas said the insurance industry should get used to more government oversight, and be prepared to be involved and work with policymakers to make informed decisions.

“The world has changed because of the federal government’s involvement more and more in insurance,” he said. “And I don’t think it’s going to be less and less.”

He addressed healthcare change and healthcare insurance exchanges, and said “they’re commoditizing healthcare.”

He depicted healthcare exchanges as “commoditized, mechanized and easily accessible,” geared, in other words, to forego the need for insurance agents. He added a warning to the audience: “You have to make sure you’re not behind the 8-ball on this.”

A theme Vargas carried throughout his speech was the lack of informed decision makers at the state and national levels, particularly when it comes to matter of insurance, and growing government involvement in state matters and insurance issues.

“More and more you’re finding individuals who make decisions who don’t know about insurance,” he said.

He later stated: “I do think the federal government’s getting more involved. I think the government’s getting more involved in state issues.”

Shea, in his installation speech, echoed Vargas’ thoughts.

“It’s going to be another year of challenges and opportunities for IBA West,” Shea said. “These folks don’t understand what we do.”

He added, “It’s all about sending letters to Congress and making yourself heard.”

Young and Norwood discussed the role of agents and brokers in the new era of health insurance exchanges brought about by the Patient Protection and Affordable Care Act, one of President Barack Obama’s first successes in office, which his opponents like to deem Obamacare.

The act requires states to have health exchanges operational by 2014, or the Department of Health and Human Services is required to step in and implement an exchange.

Websites these exchanges will use will look like Orbitz.com or Hotwire.com, a pick and click site where users can just choose providers like they’re booking a flight or a stay at a hotel, Young said, adding, “that’s their kind of notion.”

Young noted that despite notions that involvement from agents and brokers will be minimized, many businesses feel they still want to depend on brokers and agents.

“More than 70 percent of businesses who currently use a broker-agent say they would continue to rely on the broker-agent,” Young said.

As for California’s health insurance exchange, which the state was the first to implement—27 other states have followed in the state’s footsteps—it’s likely here to stay, despite impending court decisions that could overturn some of the PPACA, because the state has already passed legislation to make it happen, Norwood said.

“Even if the courts overturn this, California’s exchange is not going away,” Norwood added.

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Latest Comments

  • February 22, 2012 at 6:07 pm
    TR Campbell says:
    It seems the Senator's comment "A lot of people at the federal level are making a lot of decisions and they don’t know what they’re doing,” is reason enough to have a ca... read more
  • January 27, 2012 at 1:50 pm
    Mike Mansel says:
    Would it not be a good idea to look at this glass as being half full rather than half empty? While there may be negatives with Federal involvement in insurance, surely there w... read more
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