That's the fundamental problem. Everything else is secondary.
Excellent point, bears repeating.
I'm willing to bet that there is a statute in the California Code which gives the Governor direct regulatory control over any health insurance agency which chooses to do business in the State. That's usually how crap like this gets authorized... idiotic legislation.
Here're some more interesting statutes I ran across in a preliminary glance at California's ever-disgusting Code...
The Office of Multicultural Health
And this is the nasty statute (Section 1340-1345) which establishes executive control over the "managed care" industry.
Just like most of the other statutes in the state, this is really nasty stuff. If California is the "bellweather of the nation," then I want to pick another nation.
:) ttt