🔒Conflicts of interest cloud industry oversight

The scrutiny over Insurance Commissioner Katharine Wade's oversight of insurance industry mega mergers is reaching a tipping point.

Consumer advocates as well as lawmakers from both sides of the aisle are calling for her recusal and/or even resignation.

We've said in the past, Wade, a former Cigna lobbyist whose husband still works at the Bloomfield global insurer as an associate counsel, should recuse herself from overseeing Anthem's $54 billion takeover bid of her former employer.

We haven't changed our opinion.

That's not to say her views shouldn't be heard on the deal, she just shouldn't be the final arbiter.

We aren't questioning Wade's integrity, but the appearance of a conflict of interest does matter, especially in a merger that could have a wide-ranging impact on the cost and affordability of health insurance, both to businesses and individuals.

Wade's close ties to the industry — she also was previously head of the Connecticut Association of Health Plans — should be enough for Gov. Dannel P. Malloy to force Wade to recuse herself from the Cigna merger.

There are many issues at play here. One, of course, is politics. Republicans and Democrats would be smart to side with consumer advocates, because their fight isn't simply against Wade. They're also taking on Malloy, a sometimes headstrong Democrat who chose Wade as his commissioner and whose popularity in the state is at a record low (only 24 percent of voters approve of the job he is doing, according to the latest Quinnipiac Poll). Showing strength against or opposition to an unpopular governor could score candidates political points in an election year.

Recent scrutiny from the national press on the merger oversight has also ramped up the pressure on Connecticut politicians and regulators.

The larger issue, however, is how Connecticut — and the country — regulates industry, not just insurance, but other major sectors of the U.S. economy like banking and finance.

Government regulatory bodies often employ individuals who have past industry ties. It makes sense in a lot of ways because you want regulators who understand an industry before they make important decisions regarding its financial safety and soundness. That revolving-door mentality, however, often makes regulatory agencies vulnerable to accusations of bias.

The Connecticut Insurance Department has often been a consumer-advocate target. The agency has come under fire in the past for being a rubber stamp for health insurers, particularly in approving annual rate increases.

In more recent years, the insurance department has been more aggressive in pruning insurers' proposed rate hikes, establishing itself — at least in the eyes of some — as a tougher overseer.

The same challenges are felt on the federal level, with the constant criticisms and concerns raised over the revolving door between Wall Street and Washington D.C., particularly in the wake of the 2008 financial crisis, when lax banking-sector oversight was partly blamed for the collapse.

The goal should always be to choose competent regulators who are tough but fair to both sides, protecting the interest of consumers, while also allowing the private sector to adapt to the changing realities of the time.

Finding that middle ground, however, isn't always easy. In Connecticut's case, Wade should recuse herself from the Anthem-Cigna merger to give the public piece of mind.n

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