Insurance: Two Up, One Down : Health and quake bills deserve Wilson’s signature; an auto bill does not

Three insurance reform bills passed by the Legislature in its closing hours will soon come before Gov. Pete Wilson. He should sign two but veto the third.

HEALTH: SB 6 would create a California Health Plan Commission assigned to work out the details on how to implement a health care reform program proposed last winter by state Insurance Commissioner John Garamendi. The commission, made up of appointees of the governor, Legislature and insurance commissioner, would present its findings in 1994.

The goal of Garamendi’s plan is to provide universal coverage to all Californians through an innovative managed-care system fostered by market competition, consumer choice and cost containment by way of a regulatory mechanism. Affordable medical insurance would be funded by a payroll tax that would cost, overall, less than what companies now pay for health care. Regional health insurance purchasing corporations would contract with private companies to provide a choice of health care packages. Consumers who choose a health maintenance organization would incur no extra premium. Those who opt for more elaborate plans would pay extra. It’s an ambitious proposal, and the commission is a good first step toward implementing it.

EARTHQUAKE: The governor’s signature on AB 2049 is needed to abolish the underfunded 1990 California Residential Earthquake Recovery Act. It established a fund, financed by annual charges of $12 to $60 on homeowner insurance policies, to cover homeowners’ earthquake damage claims of up to $15,000. With all the recent earthquake activity and subsequent claims, the state has been unable to build up a reserve fund. If a major earthquake should occur in a densely built-up area, the fund would run out of money. California’s beleaguered general fund would then be liable. It’s a no-win situation. The state has other natural disaster emergency funds that could provide earthquake assistance. When AB 2049 is signed, any remaining funds would be refunded on a pro-rata basis to homeowners with insurance policies.

AUTO: Breaking the long stalemate over car insurance, the Legislature approved an overhaul measure with one very good idea: low cost, no-frills liability coverage. But otherwise SB 10 is inadequate. Missing is no-fault coverage that would require a motorist’s insurer to pay for an accident regardless of who is at fault, reducing litigation costs.

SB 10 would create a basic coverage policy with an average annual cost of about $288. It would achieve some cost savings by limiting compensation to doctors and lawyers. But as Consumers Union notes in its objection to the bill, it “does not produce enough savings.” Real no-fault insurance should save money, so Wilson should veto SB 10.