2003-10-23 -- Governor-Elect Chooses HMO Executive as his Chief of Staff

During his first official visit to the Capitol on Wednesday,
Schwarzenegger pledged "action, action, action, action" in the
Statehouse as he picked a chief of staff, Patricia Clarey.

Clarey, 50, spent most of her career working for Republican
administrations in Sacramento and Washington.  She was a deputy chief
of staff for former Gov. Pete Wilson in the mid-1990s, and previously
worked in Washington, D.C., in senior levels of the U.S. Department of
Interior under Presidents Reagan and George H.W. Bush.

Clarey took a leave from her job as vice president for governmental
affairs of Health Net Inc., a health maintenance organization based in
Woodland Hills, to work as deputy campaign manager on the
Schwarzenegger campaign.

"HMO lobbyists should not be part of an administration that pledged to
govern for the people, not for special interests ..." said a statement
issued by The Foundation For Taxpayer And Consumer Rights.  Of
Clarey's relationship to Health Net, Schwarzenegger spokesman Rob
Stutzman said: ``There are personal relationships I imagine she
wouldn't sever. Whether the chief of staff will be directly lobbied
would be a policy that is still yet to be established.''

(Contra Costa Times, 10-23-03)

We must remember, of course, that for-profit health plans were high on
the Davis agenda also.

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Los Angeles Times, October 23, 2003


THE STATE HMO Exec Named Schwarzenegger's Chief of Staff,
Patricia Clarey, veteran of Washington and Sacramento,
has been lobbying for Health Net.

By Dan Morain, Times Staff Writer

SACRAMENTO - After running as an outsider critical of special
interests, Gov.-elect Arnold Schwarzenegger on Wednesday selected as
his chief of staff a health-care industry executive who is practiced
at all the insider moves.

In naming Patricia T. Clarey his chief of staff, Schwarzenegger is
relying on someone who is a no-nonsense administrator but who also has
been a representative of one of the most influential interests in
Sacramento - the health-care industry.

"I have been working with her for the last 10 weeks throughout the
campaign and all that, and she's very efficient, very powerful,
strong, very experienced and totally trustworthy," Schwarzenegger said
in announcing Clarey's appointment.

A chief of staff is a key appointee in any administration, overseeing
day-to-day operations, involved in virtually all major appointments,
and a sounding board on policy issues. Unlike career politicians,
Schwarzenegger comes to Sacramento without a cadre of trusted aides to
serve in such high-level posts. Several top campaign aides had pressed
for Clarey to get the job.

"She is as good as it gets," said Bob White, who managed
Schwarzenegger's campaign and for 30 years served as chief of staff to
Pete Wilson.

Clarey, 50, is a veteran of Washington, D.C., and Sacramento. She
worked in the Interior Department under the first President Bush,
having lobbied for Chevron before that. She spent most of the 1990s
working in the Wilson administration, first serving as deputy chief of
staff under White.

Since March 2001, Clarey has overseen lobbying for Health Net,
California's third-largest health maintenance organization. She worked
for a major life insurance company before that.

Health Net does large amounts of business with California, providing
coverage to 557,000 senior citizens and poor and disabled people
through the state Medi-Cal program. The California Public Employee
Retirement System, seeking to slow health-care cost increases, dropped
Health Net last year as a provider to retired state workers.

Still, the company, with annual revenue of more than $10 billion,
provides health care to 5.3 million people in 15 states, including
more than 2 million in California.

Although she is expected to disassociate herself from Health Net, some
Democrats and critics of the health-care industry said they fear her
appointment suggests health maintenance organizations will regain some
influence they appeared to lose after Gov. Gray Davis signed
legislation in 1999 increasing HMO regulation.

"I don't want to predict a full-scale anti-consumer trend," said
Senate Health Committee Chairwoman Deborah Ortiz (D-Sacramento). But
the "perspective could tilt more toward corporations, rather than
consumers."

Others were more direct.

"The idea of appointing somebody who went from the Pete Wilson
administration to Health Net makes us very worried about whether HMO
reform is going to survive," said lobbyist Beth Capell of Health
Access, a group that includes organized labor and consumer groups such
as Consumers Union.

Like other HMOs, Health Net has an extensive lobbying operation. Since
Clarey joined Health Net as vice president for governmental relations,
the firm, based in Woodland Hills, has contributed $530,000 to
legislators and other political figures, including $70,000 to Davis.

Separately, the company spent $342,000 on lobbying, employing a team
that includes a former state Democratic state senator, Patrick
Johnston, and Nielsen, Merksamer, a political law and lobbying firm
that represented Wilson when he was governor.

As part of its lobbying, Health Net regularly buys legislators fancy
dinners and gives them tickets to Sacramento Kings basketball games.
In November, Health Net paid for Atty. Gen. Bill Lockyer to attend a
Rolling Stones concert at the Oakland Coliseum, its publicly filed
lobbyist statements show.

Like other such corporations, Health Net has run afoul of California
regulators. California's Department of Managed Health Care levied a
$100,000 fine on Health Net in 2001 for failing to pay physicians on
time, the second-largest penalty meted out to a health-care provider
for such a breach. The actions took place before Clarey went to work
for the firm.

Inside the Capitol, HMOs are rivals with trial attorneys who represent
patients who want to sue them over mistreatment. Physicians groups
also tangle with HMOs. For the most part, the battles are fought over
arcane issues that rarely become public.

But health care became a major issue early in Davis' tenure when he
signed legislation that created a "patients' bill of rights,"
requiring that HMOs permit patients to see specialists and seek second
opinions.

Davis also established the Department of Managed Health Care. Since
its inception, the department has handled 400,000 patient complaints,
often pressing the health-care corporations to provide care to
consumers.

The department issues a "report card" rating health plans. Health Net,
a for-profit company, ranks about in the middle. The most recent
report ranks it as "fair" in providing preventive care, and "good" in
other categories such as communicating with patients.

Lisa Haines, Health Net's vice president for corporate communications,
said Health Net supported the 1999 legislation and generally has been
supportive of the Department of Managed Health Care. Haines called
Clarey "incredibly talented, smart, levelheaded." But her appointment
does not suggest that Health Net will pursue new legislation.

"I don't think necessarily there will be a benefit" for the HMO
industry, Haines said.