Area’s Economy, Politics A Lot Like Geology Class POLITICS By Brad Smith Geologists call the tangled mass of mountains and valleys that run from the Pacific to the Mojave the Transverse Ranges Province. The name, of course, reflects that fact that the crumpled hills we call the Santa Monicas and San Gabriels run across the general north-south trend of California’s topography, evidenced by everything from the Sierra Nevada to the San Andreas Fault. Californians, all 34 million of us, live on the edge of the Pacific and North American plates, waiting for the Next Big One. Seismologically, politically, or economically. For any writer, “The Transverse Province” is an attractive metaphor for the sprawling mass of urban, suburban and downright rural landscapes between the Santa Monicas and the Los Angeles County-Kern County line. For one covering politics and business in that same area, it is downright irresistible. What other part of California could be represented by state legislators as different as Sheila Kuehl, Richard Alarcon, Tom McClintock, and the late Pete Knight? And what other part of California boasts employers as disparate as Newhall Land and Farming, Sunkist, Rocketdyne, DreamWorks, and Amgen? This is the first of what will be a regular series of columns examining the impact these incongruities have on our region’s economic health. I hope you enjoy them and decide to contribute. The Donkey in the Room: Will Villaraigosa Declare? The elephant in the room or, in Democratic Los Angeles, the donkey in the city’s mayoral race is Councilman Antonio Villaraigosa. Villaraigosa, former Assembly Speaker and the first Latino in the post since the 19th Century, has yet to announce. But the rumor moving last week was that his decision would be announced soon, perhaps even before the Democratic National Convention which begins July 26 in Boston. Why should those outside the Los Angeles city limits care? Because in spite of the opinions of untold numbers of elected officials, boosters, and wannabees from Ventura County to the San Fernando Valley, the city of Los Angeles remains the economic engine for southern California. Urban planners and economists can cite chapter and verse about how important Los Angeles is to the region, whether in terms of industry, capital, or infrastructure, especially the future of Los Angeles International Airport and the port of Los Angeles. Or even, in marketing terms, the “brand” of the larger region. So the question of who sits in the mayor’s office in the second largest city in the United States is important, well beyond the city itself. More than three years into his first term, Mayor Jim Hahn should be cruising toward an easy victory in the March primary. Instead, he has drawn three well-regarded challengers: former Assembly Speaker Bob Hertzberg and State Sen. Richard Alarcon (both San Fernando Valley residents) and Councilman (and former police chief) Bernard Parks. Any one of the trio could mount an effective challenge to Hahn, but given Villaraigosa’s showing in the 2001 mayoral election, he could be Hahn’s most formidable opponent a second time around. And all it will take for a challenger to force Hahn into a runoff would be to keep the mayor below 50 percent of the vote. With four candidates that could happen. With five, the odds only increase. Staff Reporter Brad Smith can be reached at (818) 316-3124 Long WellPoint Talks Expected By BRAD SMITH Staff Reporter Negotiations between state regulators and the principals behind a planned $16.5 billion merger and acquisition of Thousand Oaks-based WellPoint by an Indiana company are proceeding in Sacramento, although no resolution is expected for “weeks,” participants said. The discussions are over the requirements, known as “undertakings,” the state wants from the companies, WellPoint and Indianapolis-based Anthem Inc., prior to approval of the deal. State Insurance Commissioner John Garamendi, who has authority over WellPoint’s insurance business, has said he wants the new company to invest heavily in health care for low income communities in California. “We are meeting continually with the Department of Insurance and the companies,” said Lynne Randolph, a spokeswoman for the state Department of Managed Health Care. “We’re discussing those points with the DOI, but no agreement has been reached and no statement has been made.” The merger, approved in June by 97 percent of the voting shareholders of WellPoint Health Networks Inc. and Anthem would create one of the largest for-profit health care corporations. The DMHC has oversight over WellPoint’s health maintenance organization. Director Cindy Ehnes, an appointee of Gov. Arnold Schwarzenegger, will decide whether to approve any deal. “She is the final decision maker in this matter, and she needs to remain impartial until those undertakings come to her desk,” Randolph said. “We do not have a timeline at this point, but we are working as quickly as we can to come to a resolution possibly within weeks.” The merger is to be financed by $700 million in cash, $3 billion in debt, and $12 billion in stock. At a hearing on the proposal his agency held in June, Garamendi was highly critical of the deal’s impact on health care in California. He has been especially harsh about estimates that compensation for former WellPoint executives could range from $200 million to $600 million in cash and stock options. Particularly controversial has been the package for current WellPoint CEO Leonard D. Schaffer, who would be entitled to $47.5 million in cash and $6 million in stock options. “I have serious concerns that the acquisition is detrimental to the policy holders as proposed,” Garamendi said last week. “I have recommended several ways in which it can be modified, (including) investment in low income communities (and guarantees) that Californians would not pay for this merger and the executive compensation.” If approved, the merger would result in a new, Indianapolis-based holding company, also named WellPoint, controlling insurance companies and HMOs. The new holding company would own both the Blue Cross of California HMO and Blue Cross Life & Health Insurance, which together cover almost 5.2 million Californians.
