This blogger has never criticised actions by California Insurance Commissioner Steve Poizner. Indeed, we were quietly happy that he did not join Gov. Schwarzenegger's crusade for "universal" health care - whatever the cost ($14 billion if you're still counting, which is now equal to the latest estimate for the state budget deficit).

Now, however, he appears to have joined the unprecedented public beating of health plans launched earlier this year by the California Department of Insurance's (CDI) sister regulator, the Department of Managed Health Care (DMHC). Previous assaults have been launched against Blue Cross, HealthNet,and Kaiser. Now, CDI is attacking Blue Shield, attempting to levy a fine of over $12 million for mostly administrative infractions such as taking longer than 21 days to respond to an inquiry from a CDI bureaucrat, or missing documents from claims files. This follows a court decision that found the insurer guilty of violating a rule about stapling papers together - I kid you not!

Blue Shield, to its credit, is fighting back. The real issue is not these administrative quibbles, which Blue Shield claims are well within the margin of error of accepted business practice. It is that California's two regulators of health plans have apparently decided that it is wrong for health and life insurers to rescind coverage when beneficiaries have fraudulently misrepresented their health status. This regulatory adventurism will, of course, increase health insurance premiums for all Californians because insurers will find it increasingly impossible to challenge fraudulent claims.

Ironically, villain du jour Blue Shield enthusiastically supports Gov. Schwarzenegger's health-reform plan for "universal" coverage. That plan would explicitly outlaw the very processes the insurer defends in its response to Commissioner Poizner: considering a person's health status as a factor in issuing insurance. If Blue Shield would stand up for basic insurance principles, for example, that smokers should pay higher premiums, the insurer's challenge to the CDI would ring more authentic.