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Los Angeles Daily News
Aug 19, 2003

by By Evan Pondel, Staff Writer

Insurers assisting Davis

Several California insurers have contributed more than $280,000 to Gov. Gray Davis in recent weeks, with some of those companies characterizing the recall efforts as "unjustified" and a "burden to the state."

The bulk of the contributions stems from health maintenance organizations, with Health Net, PacifiCare and Blue Cross of California leading the pact. Also contributing was Zenith Insurance Co., a Woodland Hills group specializing in workers'-compensation insurance that donated $100,000 to Taxpayers Against the Recall.

Gabriel Sanchez, a press secretary for Davis and spokesman for Californians Against the Costly Recall, said the governor has been receiving support from a wide swath of donors. "And there is absolutely no connection between political contributions and policy that the governor makes," he said. "And let's be clear here: The governor has not needed to do any fund-raising for some time now."

The health care industry might have good reason to support Davis as several bills that could affect insurance premiums make their way through committees this week. Among those bills is Assembly Bill 1528, which is sponsored by Blue Shield of California, the California Healthcare Association and Kaiser Permanente. At the focal point of the legislation is a system known as "pay or play," requiring an employer to provide health care coverage or pay a fee so workers and their dependents could obtain coverage from a statewide pool.

Instead of implementing mandatory health insurance, Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights, said Davis and the state Legislature must address affordability at a time when rising premiums are closing doors on small businesses in need of coverage.

"The problem is that legislators have until Sept. 12 to get their special-interest bills to Davis and the insurers want to make sure they get in there before their cash cows are taken out to slaughter," Flanagan said.

Health Net would not comment on whether it supports any of the proposed bills. But an official of the Woodland Hills company did say it doesn't agree with the recall election.

"We're contributing money ($25,000) to Davis because we don't think the recall election is justified," said Lisa Haines, a Health Net spokeswoman. "Davis should be able to serve out his term."

Blue Cross of California, a subsidiary of WellPoint Health Networks, contributed $20,000 to the Davis committee a week ago. The Thousand Oaks-based insurer said the payment has nothing to do with the recall efforts.

"We donate money to the Governor's Office every year about this time," said Ken Ferber, a WellPoint spokesman. "There's no connection to the recall."

PacifiCare did not return phone calls Tuesday inquiring about its $25,000 donation to Davis, made July 29.

Aside from health care reform, legislators have struggled to tame the unruly costs associated with workers'-compensation insurance. Stanley Zax, chairman and president of Zenith, said he opposes the recall because "Davis understands the workers'-comp issue. I don't want to see California turned into a banana republic. I don't think it's appropriate to recall any governor when it's to be run like a popularity contest."

Gross workers'-compensation premiums written by Zenith increased about 50 percent in the second quarter ended June 30 compared with a year ago. The company reported net income of $18.4 million during the period, versus $6.5 million in 2002. Zax said a law that caps premium increases isn't a viable solution to stabilize or cut the cost of workers' comp.

"The prices we have to charge our customers are very high and appalling," Zax said. "But what we need to control is medical costs, not premiums."
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Evan Pondel, (818) 713-3662 evan.pondel@dailynews.com



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