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The Indianapolis Star
Jul 24, 2004

by J.K. WALL

Top regulator sports a tough image;

California commissioner says consumers come 1st; some feel he's driven by political aspirations.
California Insurance Commissioner John Garamendi prides himself on protecting consumers.

Others say he merely engages in populist posturing to win higher office.

Both theories were flying Friday after Garamendi rejected the proposed merger of Anthem Inc. and WellPoint Health Networks, which would create the largest medical insurer in the country.

"John Garamendi has become one of the most aggressive protectors of consumers in the nation," reads a biography on the commissioner's Web site. "He is well on his way to fulfilling his promise to make the California Department of Insurance the best consumer protection agency in America."

But to hear Anthem Chief Executive Officer Larry Glasscock and some Anthem analysts tell it, Garamendi is only building an anti-big business image to win votes.

"This provides a nice platform, doesn't it?" Glasscock asked cynically during a Friday news conference in Indianapolis.

Asked by reporters in San Francisco about his political motives, Garamendi said, "I'm not running for governor. I am doing this because I was elected by the people of California to protect the policyholders of California."

Just last week, however, Garamendi declared that he was a candidate for California lieutenant governor, a position elected separately from the governor. He told the San Francisco Chronicle that he has been preparing to run for the past four months.

Garamendi, 59, has made a career in politics that has taken him from the West Coast to Washington and back again. Since his days as a state legislator in the 1970s and '80s, he has often reached for higher office.

During his 16 years as a state legislator in California, he reportedly once nominated himself for Senate president. But no one seconded his motion.

Garamendi became California's first elected insurance commissioner in 1991. Before his term was up, he ran for the Democratic nomination for governor in 1994 but lost in the primary.

In 1995, he was deputy secretary of the Department of the Interior in the Clinton administration. He took a detour to the private sector in 1998, working about four years in a Los Angeles investment firm, before he ran again for insurance commissioner in 2002.

"It's fair to say that he's politically ambitious," said Nicole Mahrt, spokeswoman for the Western regional office of the American Insurance Association.

Given the recent double-digit increases in health care costs and the public backlash against health maintenance organizations, insurance commissioners have become much more visible officials.

Kathleen Sebelius, former insurance commissioner of Kansas, used her showdown with Anthem as a campaign issue in her successful campaign for governor in 2002. Sebelius denied Anthem's attempt to purchase the Blue Cross Blue Shield insurance group of Kansas, even battling Anthem as far as the state's Supreme Court.

Nevertheless, Garamendi's decision Friday had nothing to do with politics, his supporters say.

"Our position on Garamendi -- and I think his decision today proves it -- is that he's a tough regulator who stands up to special interests," said Jerry Flanagan, spokesman for the Foundation for Taxpayer and Consumer Rights in Los Angeles. "He should be congratulated."

Ray Bourhis, a San Francisco attorney who makes his living suing insurance companies -- and sometimes the Department of Insurance -- called Garamendi "the best insurance commissioner in the country."

Even if Garamendi wants higher office, Flanagan and Bourhis said, the way to get there is to curry contributions from insurance companies, not to thwart their mergers.

"By telling an insurance company to go to hell, it's not a way to get into office," Bourhis said. "He would never make a decision like this for political office."

Biography - John Garamendi

Title: California insurance commissioner.
Age: 59, born Jan. 24, 1945.
Education: Bachelor's degree from University of California, Berkeley; master's from Harvard.
Experience: Served two years in California State Assembly and 14 years as a state senator; California's first elected insurance commissioner, 1991-95; deputy secretary of U.S. Department of the Interior, 1995-98; re-elected as insurance commissioner, 2003.
Family: Wife, Patti; six children and eight grandchildren.
Etc: He and his wife served as Peace Corps volunteers in Ethiopia.
Political aspirations: Announced on July 16 that he will run for lieutenant governor of California in 2006.

Source: California Department of Insurance Web site
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Contact Star reporter J.K. Wall at (317) 444-6287 or JK.WALL@INDYSTAR.COM


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