Proposals in Sacramento, 2007Go to Senator Sheila's Kuehl's page on our website to see her essays on proposals for this year. Download a table comparing various proposals: table032407.doc 2/5/2008. Leeland Y. Yee. ABX1 1
favored insurers over health for all Californians. San Francisco Chronicle. Leland Y. Yee I joined California nurses, school employees, senior
groups and a number of labor unions last week in opposing the governor's
flawed health-care bill, Assembly Bill X1 1. While the bill was
touted as a fix to our broken health-care system, after extensive
study by the Senate Health Committee and the nonpartisan Legislative
Analyst's Office, it is now clear that this proposal was bad for
consumers and unfairly favored insurance companies. Sara Rogers, Consultant, Health I'm writing this article on Halloween night,
still in my office in the State Capitol. I‚ve just finished watching the
Assembly Health Committee hold a 6 hour hearing on the Governor‚s
health care proposal, during which I ate too much Halloween candy,
and, consequently, I find myself in a silly mood. Back to top Jordan Rau With time running out to overhaul California's healthcare system this year, Gov. Arnold Schwarzenegger and Assembly Speaker Fabian Nuñez are fashioning a high-stakes strategy to raise business and hospital taxes through a ballot measure that would circumvent defiant Republican lawmakers. "I think we're on the verge of doing something huge," Nuñez told The Times' editorial board Friday. The unusual partnership between the Republican governor and the Los Angeles Democrat echoes their collaboration last year, which resulted in landmark global warming legislation and a minimum-wage increase. But a closed-door deal could incur political wrath for both men. The governor is backing tax increases despite last year's campaign pledge against them, and Nuñez could alienate labor and consumer advocates for supporting mandatory health insurance. Coming with just two weeks left in the legislative session, the negotiations are focused on expanding medical coverage to nearly all of the 4.9 million Californians without it. The plan would require all Californians to have insurance and would give subsidies to those unable to afford coverage. It would also address the problems of the private insurance market and require healthcare providers to reveal the costs of their services to foster competition. Schwarzenegger and Democrats have agreed all year on most of those goals. But they have been stymied on how to pay for it, since any tax increase passed by the Legislature requires two-thirds support, necessitating some Republican votes. GOP legislators have refused to budge on Schwarzenegger's proposal for a blend of taxes on hospitals, doctors and employers. And Schwarzenegger opposes as too high the Democratic alternative of requiring all employers to spend the equivalent of 7.5% of their payroll on medical care for their workers or pay a fee to the state. Republicans oppose any tax increases and have favored piecemeal efforts to make healthcare more accessible. Under the gambit now being developed, the Democratic majority in the Legislature would approve a bill containing most of the plan except the financing, and possibly establish a special board to work out the details. Those issues require only a majority approval. The governor, Democrats and supporters would draw up a ballot initiative for next year. It would ask voters to approve the employer spending mandate -- but at a rate lower than the Democrats' proposal -- as well as a tax on hospital revenues, and possibly a sales tax increase. "The governor has always said he's open to doing whatever it takes, and that includes the ballot," said Daniel Zingale, a senior advisor to Schwarzenegger. The money would be used to increase Medi-Cal payments for healthcare providers that treat the poor and pay for insurance for employees whose companies do not provide it. The hospital tax would allow California to obtain $1.7 billion in extra Medicaid money from the federal government, which matches money the state provides for care of the poor. That money would be distributed back to those hospitals based on how many poor people they cared for. The hospitals' support is critical to passing any initiative. Plus, some strategists believe that strong backing could budge enough Republican legislators to make the initiative unnecessary because many hospitals in GOP legislative districts stand to benefit financially. In recent days, Schwarzenegger has intensified his effort to win their backing. An analysis commissioned by some of the hospitals and released a week ago found that the industry would benefit from the additional Medicaid money, and only a small number would be net losers. Of the major chains, Catholic Healthcare West and Sutter Health would each gain more than $180 million, Tenet Healthcare would gain $110 million and Adventist Health would gain $82 million, according to the administration's review of the hospital data. Kaiser Permanente would lose $119 million, but its chief executive has been supportive of Schwarzenegger's effort. About 30 individual hospitals that don't treat many poor people or are specialty institutions would also lose money. C. Duane Dauner, president of the California Hospital Assn., has staunchly resisted the hospital tax as long as any hospital loses money. But Thursday, the executive committee of the association's board met with Schwarzenegger to hear his pitch, and the full board meets Tuesday to discuss its next action. "As hospital groups have become aware that this actually does work, the momentum has swung from resisting it outright to feeling that it holds a lot of promise," said Wade Rose, a spokesman for Catholic Healthcare West, which has been pushing for the tax. The plan Schwarzenegger and Nuñez are discussing would deviate in two significant ways from the governor's original proposal that he laid out in January to national attention. First, while all Californians would be required
to have insurance -- a bottom-line requirement for Schwarzenegger,
but one opposed by labor unions and consumer advocates who say
low-income wage earners could not afford it -- Nuñez is
insisting on protections for people who make too much to qualify
for state subsidies but not enough to shoulder the costs of premiums. One idea Nuñez floated to The Times editors would be to cap the maximum amount anyone would have to pay for premiums at 5% of their income. However, that would mean the state would need to find billions more in subsidies than Schwarzenegger had proposed in his $12-billion plan. The second major difference is that the plan excludes Schwarzenegger's proposal to tax the income of doctors' practices. The governor's plan would have used that money to increase Medi-Cal payments to doctors, but the California Medical Assn. has opposed the idea, which many doctors say could devastate their practices. "Some people say that so far doctors have not contributed one single thing to this conversation," Nuñez said. "I'm very disappointed about that. I've never seen a doctor in a welfare line." In response, Dr. Anmol Mahal, president of the doctor's lobby, said in a statement: "Doctors take care of uninsured patients each and every day. As well as any Sacramento politician, we understand the critical importance of passing healthcare reform for this state." Nunez said he understood why Schwarzenegger could not support the Democratic bill, AB 8, because its employer tax was nearly double the 4% payroll spending requirement that Schwarzenegger proposed in January. "This is his last link to his claim on being a Republican, having business support," Nuñez said. "He loses that, he's done." The strategy has far to go. Senate President Pro Tem Don Perata (D-Oakland) has not signed on to the idea, nor have rank-and-file Democrats. And there is little time left in the legislative session. It is scheduled to end Sept. 14, but lawmakers are hoping to finish Sept. 11, before the Jewish holidays. At an event in San Diego on Friday, Schwarzenegger said he was optimistic that a deal could be reached. "Something that was maybe impossible to be done last year, impossible to be done five years ago or 10 years ago, I feel that the timing is right," he said. Nuñez was more guarded. "The progress we've made has been considerable," he said. "The question now is, can we go back to our constituencies and can we make the deal work." "It's not gonna be easy for him and it's not gonna be easy for me," Nuñez said. "He's got a business issue, I've got a labor issue, and we're both gonna have to figure it out. We're both gonna have to be Nixon in China." Fabian Nuñez (Fabian Nuñez is speaker of the Assembly.) In the next 15 to 18 days before the Legislature
adjourns, the narrow window of opportunity we have to achieve healthcare
reform in California -- reform that expands access for those who
don't have health coverage and keeps costs down for those who do
-- will start to close. If history is a guide, we can expect an
anything-goes campaign in the next few weeks to delay, derail and
demonize healthcare reform. We need to focus on some basic truths
to keep that campaign from succeeding. Californians Support Major Change in Health Care Although nearly nine out of 10 Californians who
have health insurance say they are satisfied with their coverage,
a large majority of voters would make major changes in the way
health care is delivered in the state, according to a new independent
poll to be released today. Jordan Rau California employers would be required to spend 7.5% of payroll on the health of their workers, and the state could increase that rate without legislative approval, under a plan announced Thursday by the Capitol's two top Democrats. The proposal, a merger of two measures that recently passed the Assembly and Senate, would rely on businesses to reduce the number of Californians without insurance. It lacks any requirement that people obtain insurance — a cornerstone of Gov. Arnold Schwarzenegger's proposed approach. Republicans and business leaders have objected to the Democrats' approach all year. But the leaders do not need their support to move the new bill through the Legislature. The bill would demand more of businesses than either the previous Senate or Assembly measure. Companies that did not spend the requisite amount would have to pay into a state fund that would provide insurance to their workers. Assembly Speaker Fabian Nuñez (D-Los Angeles) agreed to drop an exemption for small businesses and start-ups that the Assembly had approved. "The Democrats in this building are now united," said Senate President Pro Tem Don Perata (D-Oakland), speaking at a Capitol news conference. The employer requirement would be nearly twice the 4% of payroll that Schwarzenegger suggested in January. And the new bill would make it easy for the rate to be increased above 7.5% without legislative approval; it would empower an independent panel dominated by gubernatorial appointees to make adjustments to keep up with rising medical costs. "This plan will do nothing to address the rising costs of healthcare and will only devastate our state's small businesses," said the leader of the Assembly's Republicans, Michael Villines of Clovis. Health insurance premiums rose 8.7% in California last year, according to the California Health Care Foundation, an Oakland-based nonprofit group. The average annual cost for employer-provided coverage for a family was $11,860, the group says. The Democrats' plan reflects confidence that they can prevail in negotiations with Schwarzenegger as they seek to refine the measure into one he will sign. The governor has promised a major healthcare overhaul this year, and many Democrats believe that he will be reluctant to veto what they place before him. The governor's proposal, outlined in January, aims to spread the financial burden of universal health insurance among employers, hospitals and doctors through $4.4 billion in assessments — fees, the governor says — on those industries. Republican legislators have balked at that approach as well. And no one in the business lobby or the healthcare industry has endorsed the governor's plan, although Schwarzenegger has received international praise for wanting to insure all Californians. Further complicating Schwarzenegger's approach is an opinion from the Legislature's nonpartisan lawyers that the levies on medical providers are a tax, not a fee. The governor campaigned for reelection last year on an anti-tax platform. And tax measures require some Republican support to pass the Legislature. But at his own news conference in a Sacramento neighborhood Thursday morning, Schwarzenegger dismissed the significance of the legal opinion. "I don't get caught up in these details," he told reporters. "I want to create healthcare for the people, and to me I look at it as a fee, I stick with that. And if someone else wants to call it something else, they can figure that out later on." Schwarzenegger contended that "the only way that the healthcare reform is going to work is if you have mandatory healthcare insurance" coupled with a mandate that insurers not exclude anyone from coverage. He praised "a great mood in the Capitol of working together" and predicted a satisfying compromise before the Legislature adjourns in September. "What you see now is not really what counts," he said. "Always what counts is, what is the outcome? And as you know, it can turn very quickly … because in the end, like I said, everyone wants to make this work." Business lobbies faulted the Democratic plan for not doing enough to keep healthcare costs down and for placing the financial onus on employers to cover 3.4 million Californians who currently have no health insurance. The National Federation of Independent Business headlined its statement objecting to the plan: "Merging of healthcare bills tightens noose around necks of small-business owners." The Coalition to Advance Healthcare Reform, a group of insurance companies and large employers that already offer worker coverage, issued a statement expressing "concerns" about the Democrats' reliance on employers to fund their plan. They also said the plan does not do enough to keep medical costs down. In many ways, the Democratic proposal is a more comprehensive version of California's last stab at healthcare reform, a 2003 law that required employers to provide insurance. It was narrowly repealed the next year. Schwarzenegger supported the repeal, saying the law — which would have applied only to companies with at least 50 workers — was too burdensome to business. This year, Schwarzenegger has said he would support requirements on business as long as other players in the healthcare industry were required to share the cost of expanding coverage. On Thursday, the Democrats said their bill, AB 8, does place some burden on groups besides employers. Insurers would no longer be allowed to deny policies to individuals, except those with the most serious medical conditions. They would pay into a state pool to take care of the sickest. The bill also would ensure that all children in poor and working-class families have health insurance, something the governor included in his proposal. "I think our bill is pretty consistent with [the governor's] concept of shared responsibility," said Nuñez. "Everyone's got a role to play here. Everyone's got to tighten their belt." Tom Chorneau Two bills intended to overhaul California's distressed health care system won preliminary passage Thursday in the state Legislature, setting in motion more earnest negotiations with Gov. Arnold Schwarzenegger on a variety of proposals for change. The measures, one by Assembly Speaker Fabian Núñez, D-Los Angeles, and the other from Senate President Pro Tem Don Perata, D-Oakland, would extend coverage to 3.4 million working Californians and their families who now lack health insurance. Those two plans, along with proposals from the governor and other lawmakers, now become the starting point for a contentious debate over the best way to deliver and pay for health care in California. Although Schwarzenegger and the Democratic leaders continue to be optimistic that agreement can be reached this year, there's growing skepticism among many political insiders that the challenge will be met. "I think there will be some changes made in the health care system, but they will be piecemeal and certainly not a complete overhaul," said Garry South, a longtime Democratic consultant and onetime top aide to former Democratic Gov. Gray Davis. "As Hillary Clinton found out, there's some heavy political reality that one has to deal with in trying to inject massive change to the health care system," he said. So far, as South and others noted, the plans have yet to navigate the concerns of the many interest groups entrenched within California's $167 billion health care system. Schwarzenegger's plan, released in January, would share the burden of extending care to all of the state's uninsured residents, requiring all but the smallest employers to provide health insurance or pay 4 percent of payroll into a pool for purchasing policies. The governor would require all Californians to have insurance and require insurance companies to accept all applicants, regardless of any pre-existing health conditions. He would expand government programs to include more of the working poor and ask doctors and hospitals to pay a new tax to help expand the system. But the governor's plan has not yet been introduced as a bill in the Legislature and thus, to some degree, has avoided direct assault from critics. The two bills offered by the Democratic leaders, which passed with almost no Republican support, are virtually identical and are expected to be merged into a single proposal. Unlike the governor's plan, the Democrats would cover only about two-thirds of the uninsured population. Their plans require employers to pay a 7.5 percent payroll tax while also requiring workers to pay up to 4.5 percent of their income toward the cost of coverage. The Democrats also would expand existing government health care programs and cap the profits of insurance carriers. Daniel Zingale, a senior adviser to the governor on health care issues, noted that there is a lot of common ground between Schwarzenegger and the Democrats. "A year ago, no one expected that there could be a major reform effort on health care," he said, noting that now not only has the governor made a proposal but there have also been plans from the Democratic legislative leaders, a single-payer plan and ideas put forward by Republicans. The single-payer plan, which also won passage this week from the state Senate, would do away with private insurance and replace it with a system overseen by the state that would provide health care to all residents. Schwarzenegger vetoed a nearly identical bill last year and has said his mind has not changed. The plan still has strong support from the Democratic majority, although the bill's author, Sen. Sheila Kuehl, D-Santa Monica, has said she might hold off bringing it forward until next year. Most of the focus now is on the negotiations between the governor and Democratic leaders. Interest groups -- from hospitals and doctor groups to business and insurance organizations as well as labor unions -- have been unusually cooperative so far. Perata acknowledged Thursday that as an agreement between the governor and lawmakers begins to take shape, lobby groups will increasingly begin operating in their own interests. "The progress that we've made up to now is all gravy as far as I'm concerned," he said. "We will get to a point where we will look into everyone's eye and we'll say, 'Blink or don't blink.' And some will blink, and we'll have to go forward with those who remain." Frank Schubert, a longtime Republican political consultant who has run several health care-related campaigns, repeated a warning made by many health care and business groups in recent weeks. "Health care reform is very difficult because there's enormous
consequences," he said. "When you start messing around
with the current insurance market that covers about 20 million
people, you have to be careful." Comparing proposals A comparison of the health care plans proposed by Gov. Arnold
Schwarzenegger, state Sen. Sheila Kuehl, D-Santa Monica, Senate
President Pro Tem Don Perata, D-Oakland, and Assembly Speaker Fabian
Núñez, D-Los Angeles: WHO'S COVERED The governor's plan aims at expanding coverage to 6.5 million
uninsured residents. Kuehl's plan would establish a new system
for all California residents. Perata and Núñez have
plans to extend coverage to 3.4 million working families that do
not currently have health insurance. HOW THE PLANS WORK The governor's plan requires all Californians to get coverage
from a private insurer or from an existing government program.
Kuehl's plan would replace private insurance with a single-payer
system managed by the state. Perata and Núñez have
each proposed plans that would require all but the smallest employers
to provide insurance to workers; both plans also would expand government
programs to include more low-income or unemployed residents. COST The governor's plan requires that individuals have at least a minimum policy with a $5,000 deductible and maximum out-of-pocket payment of $7,500 per person. Employers with 10 or more workers must offer coverage or contribute 4 percent of payroll into a purchasing pool. The governor also would impose a revenue tax on providers -- 2 percent on doctors and 4 percent on hospitals. Kuehl's plan imposes a payroll tax of 8 percent on employers and 4 percent on workers. Perata and Núñez would impose a 7.5 percent payroll
tax on employers. Workers would be asked to pay up to 4.5 percent
of income or no more than $288 per month for a family of four on
an annual income of $103,000. KEY CRITICISMS The governor's plan would rely too heavily on the taxes on doctors and hospitals to help pay for new coverage. Insurance companies also would be required to accept any applications, regardless of pre-existing health conditions. Kuehl's plan might require additional new taxes to pay for services if planned sources of revenue cannot keep pace with medical inflation. Neither plan from Perata or Núñez covers all of the uninsured. There are also concerns that employers are being asked to carry too large a burden of the cost, even as some believe the coverage that workers would be asked to pay for would also be too expensive.
David Lazarrus Passage of SB840 -- a bill that would guarantee health coverage for all Californians -- by the state Senate this week is a significant victory for all those who believe health care is a right, not a privilege. But that may still be wishful thinking. It's unclear how SB840, authored by state Sen. Sheila Kuehl, D-Santa Monica, will fare in the Assembly. And even if it's passed by the full Legislature, as was the case last year, it almost certainly would face a veto by Gov. Arnold Schwarzenegger, as was the case last year. So I say this: Let the people decide. If our lawmakers can't or won't recognize the urgent need for universal coverage, then it's time to repackage SB840 as a ballot initiative and put it to a vote by those most directly impacted by our obscenely dysfunctional health care system -- us. For her part, Kuehl told me that she still wants to try her luck in the Legislature before taking SB840 straight to voters. "Ballot initiatives should be brought only when the tipping point is reached," she said. "I think a lot more education has to be done so that people understand why this bill is the gold standard for health care." Well, school's about to start. On June 29, Michael Moore's new documentary, "Sicko," hits theaters. It's said to offer a devastating depiction of the roughly 47 million Americans who lack health insurance and to make a powerful case for universal coverage. Moore will screen "Sicko" in Sacramento on Tuesday and participate in a legislative briefing at the Capitol. He's also scheduled to join Kuehl at an afternoon rally that organizers hope will draw more than 1,000 supporters of universal coverage. "This movie is going to have a big impact on the movement," Kuehl said. "It will be a major indictment of the insurance industry and what they're doing to us." After SB840 passed 23-15 in the state Senate on Wednesday afternoon, Moore issued the following statement: "The health care industry has a death grip on our society because the insurance companies put profits before patients, which is why we as a country spend considerably more on health care than other developed countries and get back far less. "In recognizing that for-profit insurance is incompatible with a caring, a moral and a high-quality health care system that provides coverage for all, Sen. Kuehl is leading the fight to break the industry's death grip." The timing has never been more auspicious for health care reform in both California and the nation. The issue is consistently polling at or near the top of voters' concerns, and politicians have been busy cobbling together a variety of plans for how things could be different. But most of those plans envision expanding our current system to cover most (but not necessarily all) of the uninsured. They don't address the nagging problem of ever-increasing health care costs, nor do they remedy the extraordinary fact that an estimated one-third of all health care spending is squandered on bureaucratic overhead. SB840 would tackle these issues only on a statewide basis. But this would be a start, and it would demonstrate for the rest of the country that universal coverage is both politically and economically feasible. "It's the only sensible approach," said Rose Ann DeMoro, executive director of the 75,000-member California Nurses Association. "It takes away the power of the insurance companies and essentially creates an expanded Medicare system." SB840 would establish what's called a single-payer insurance system for all Californians. In other words, tax dollars would create a pool of publicly administered funds that would be applied to covering medical treatment for state residents. This would replace the existing employer-based system and private insurers' premiums, deductibles and co-pays. A 2005 study by the Lewin Group, a health care consulting firm, found that a government-run system as envisioned by Kuehl's legislation would cover the almost 7 million Californians now without insurance while saving about $8 billion. Rival plans put forward by Schwarzenegger and Democratic leaders in Sacramento would seek to extend coverage to the uninsured by having employers contribute varying amounts to a state pool. The insurance industry, meanwhile, is also championing reform -- but only to the extent that reform means enlarging its customer base, not introducing a single-payer system. Insurers and their allies are already blitzing the airwaves with ads touting favored proposals. So would a ballot initiative work? It wouldn't be easy. "Insurers would spend hundreds of millions of dollars to defeat it," observed Jerry Flanagan, health care policy director at the Foundation for Taxpayer and Consumer Rights, a Southern California consumer advocacy group. "They'd attempt to focus people on tax increases and drown out that this would be far less than what people now pay in premiums and deductibles," he said. A Field Poll found in January that 81 percent of voters believe that government should be responsible for ensuring "that all Californians have access to affordable health care insurance." At the same time, though, more voters (42 percent) would choose to receive coverage from an employer than from the government (22 percent), the poll found. Flanagan interprets these numbers to indicate that California voters don't yet understand the nuts and bolts of a single-payer system, or the savings that would be achieved under a government-run insurance program. The onus would be on reform advocates to educate voters about the facts amid what would undoubtedly be an all-out campaign by insurers to maintain the status quo. I think people are smart enough to tell right from wrong, and to know what's in their best interest. If state lawmakers are unclear on the concept, let us have a say about California's health care future. It's our money, after all. And our lives. Jordan Rau Daniel Weintraub Gov. Arnold Schwarzenegger and California's legislative leaders have proposed ways to shore up our current, employer-based health care system with new mandates, taxes and subsidies to cover more people. Republican lawmakers are pushing for incentives to bolster private choice and responsibility. But one plan proposed in the Legislature stands out as radically different from the rest. Senate Bill 840 by Sen. Sheila Kuehl, D-Santa Monica, would scrap the status quo and replace it with a government-run, single-payer system providing comprehensive health care benefits for all, financed by taxes and free to patients at the point of service. "California needs a system of truly universal health care now more than ever," Kuehl said this week as she reintroduced her bill, which Schwarzenegger vetoed last year. "This is not the time to wait patiently for universal health care. It's time to move forward." Kuehl's plan would mean a vast increase in the power of government over the health care industry and the way services are planned and delivered. Hers is the only proposal on the table that seeks to directly limit the cost of health care. It would do so by setting an annual budget and then enforcing it through negotiations with doctors, hospitals, labs and pharmaceutical companies, or by hiring health plans to provide benefits at a set cost. Those benefits would be comprehensive. The plan would cover primary care, preventive care, outpatient and hospital care. It would cover mental health, dental, vision, podiatry, chiropractic care, acupuncture, substance abuse and prescription drugs. Even faith healing. Long-term nursing home care would not be covered. What would all this cost? One detailed economic
study, by the Lewin Group, concluded that the plan could be financed
simply by redirecting all of the money Californians and the federal
government already spend on health care in the state. Care for
those not covered now would be paid for with savings in administrative
costs and the elimination of insurance company advertising On a practical level, that would mean payroll taxes of about 4 percent for workers and 8 percent for employers, a 12 percent tax on the self-employed, a 3.5 percent tax on investment income and a 1 percent income tax surcharge on Californians earning more than $200,000 a year, the Lewin study said. The program would be administered by a universal health care commissioner appointed by the governor, and an office of patient advocacy, an office of health planning, an office of health care quality, a public advisory committee and a payments board. The commissioner and his or her staff would be responsible for setting the budget each year and sticking to it. They would establish a list of approved drugs for which the state would pay and try to use the power of 37 million customers to drive prices down. They would decide the appropriate number of specialists and general practice doctors in each region of the state, distribute money for the construction of new clinics and hospitals, and evaluate new medical technology to decide whether it should be paid for as part of the state plan. The commissioner would be required by law to try to limit the growth in costs to the growth in the state's economy and population. This would be crucial because the taxes to support the program would grow at about that same rate as the economy. But with an aging population demanding more care than Californians receive today, it would be difficult to keep the system in fiscal balance for very long. Within 10 years, the independent study of the plan showed, costs would outstrip revenues by $70 billion unless current trends could be arrested. One big cost challenge would be the system's reliance on fee-for-service medicine, in which doctors would provide whatever care they deemed appropriate and then bill the state. The private insurance industry has largely abandoned that practice in favor of more managed, coordinated systems to try to control costs. Doctor fees in the single-payer system would be set by the state, but it would be difficult to prevent physicians from providing more care to maintain their incomes. Kuehl said the new program would have a strong anti-fraud enforcement unit, but, ultimately, it would leave broad discretion in the hands of physicians. "We have to trust that doctors are providing the services that are needed," she said. If costs did start to rise faster than revenues, the commissioner could postpone new benefits, decrease existing benefits, suspend capital improvements, reduce payments for prescription drugs or even impose co-payments and deductibles. If none of that worked, the commissioner could ask the Legislature to raise the tax rates to provide more revenue. Kuehl said this week she does not intend to amend her bill in a compromise with the governor and legislative leaders because it is a concept so different from theirs. While she does not expect Schwarzenegger to sign her bill, she says the next governor might. Or she and the plan's supporters might take their cause to the voters. "The facts are on our side," she said. "The people are on our side." Jordan Rau In a boost to Gov. Arnold Schwarzenegger's political priority for the year, some of the biggest players in the state's healthcare industry have agreed to commit millions of dollars to a campaign for universal healthcare access. The yet-unnamed alliance, which plans to announce its creation today, includes a labor giant, the Service Employees International Union; the state's largest doctors lobby, the California Medical Assn.; the state's biggest nonprofit hospital chain, Catholic Healthcare West; and three major insurers: Kaiser Permanente, Blue Shield of California and Health Net. "For the first time ever, the major players are not in their bunkers throwing grenades at each other," said Joe Dunn, chief executive of the California Medical Assn. "Everyone is coming together in a sincere effort to work out a plan for reforming medicine in California in a way that works to improve patients' ability to be treated by their doctor." The coalition's members have not agreed to support all elements of any plan that emerges from negotiations with Schwarzenegger and the Legislature, and in fact several have expressed concerns about the governor's proposal. But the alliance members said they would support the effort to ensure access to medical care for all Californians and have accepted Schwarzenegger's notion of "shared responsibility" — that all participants in healthcare, including patients, insurers and businesses, must give up something. The alliance's formation is intended to counter any campaign that arises to block an overhaul of the state's healthcare system. Such concerns are not hypothetical: A referendum paid for mostly by business groups in 2004 was able to nullify California's last major effort at expanding medical insurance by repealing a law that would have required all mid- and large-size employers to provide coverage. Last month, a conservative small-business group aired television ads saying Schwarzenegger's healthcare plan would "throw your tax dollars away on a big government bureaucracy." The new alliance does not include members who helped repeal the last law in 2004, but organizers said they hoped to expand its reach in coming weeks and establish as broad a coalition as possible. Although most of the members of the alliance supported the previous healthcare law, which in fact was written by the California Medical Assn. and labor, all have much to lose as well as gain if Schwarzenegger's proposal becomes law. His plan includes a 2% levy on doctors' profits and a 4% fee on hospital operations. Insurers would have to provide coverage to all who wanted it, regardless of their healthcare history, and also would face limits on profits. "We didn't want to see comprehensive proposals picked apart by people who object to one piece of it," said Tom Epstein, a spokesman for Blue Shield. The alliance, he said, "requires negotiating in good faith and accepting that we're all going to have to compromise and not stick it to each other to get what we want." Participants have not committed to specific amounts of money to put into the campaign, organizers said, but will at a minimum be able to run a multimillion-dollar campaign. Schwarzenegger has been trying to build support and was to meet with the California Business Roundtable's board today but so far has not won such a strong commitment as the new alliance's to finding a solution to the high costs of health insurance and the 6 million people who lack coverage. Schwarzenegger spokesman Adam Mendelsohn praised the formation of the alliance. "You're seeing a coalition of opposites ignite because they all believe the healthcare system is broken," he said. "That's a very dramatic statement." George Skelton Although they flatly rejected Gov. Arnold Schwarzenegger's
healthcare proposal, Senate Republicans did the governor one favor.
They showed him how to maneuver around a big stumbling block to
any major expansion of medical coverage in California. Daniel Weintraub The Republicans in California's state Senate are
the weakest of all the power blocs in the Capitol, their numbers
so small that their views are often little more than an afterthought
when lawmakers deliberate policy. Democrats today are just two
votes short of the two-thirds majority they would need to do anything
they like in the Senate, and at crunch time, either the Democratic
leaders or the Republican governor can usually find those two votes
if they need them. Although they flatly rejected Gov. Arnold Schwarzenegger's
healthcare proposal, Senate Republicans did the governor one favor.
They showed him how to maneuver around a big stumbling block to
any major expansion of medical coverage in California.
California Gov. Arnold Schwarzenegger wants $3.7 billion a year in new federal funding to cover a big chunk of his health-care plan for his state, putting him on a collision course with budget hawks in the nation's capital and leaders in other states seeking assistance. The sheer size of the federal allocation Schwarzenegger's plan would require is raising eyebrows. "That's a big number on an annual basis," said Sen. Judd Gregg of New Hampshire, the ranking Republican on the Senate Budget Committee. "California hasn't yet passed a law (implementing the governor's plan), but when they do, I would think people are going to take a deep breath." The cost of helping states fund their health plans has attracted the attention of budget cutters, because it is complicating President Bush's stated goal of balancing the federal budget in five years. In his new budget, scheduled to go to Congress on Monday, Bush is expected to call for a substantial slowdown in federal health-care spending. Some of the cuts Bush proposes could affect programs Schwarzenegger is counting on to help pay for his plan, such as Medicaid. Because California is the most populous state, its plan is by far the largest. But four other states are pursuing initiatives to provide health insurance for all their residents. More are expected to follow this year. That could set off a scramble for increasingly scarce federal dollars. "When they do the math and figure out just exactly how much federal money will be flowing to California ... some people will say, 'Why should California get it, and other states get nothing?' " said health economist Len Nichols, of the nonpartisan New America Foundation. Nichols and other experts say state attempts to reform health care are likely to require tens of billions of dollars in additional spending in two federal programs that operate as partnerships with the states -- Medicaid and the State Children's Health Insurance Program, or S-CHIP. These programs are different in every state, and they operate under a complex series of laws, rules and formulas for federal matching funds. Medicaid is the nation's main health-care program for the poor, paying for medical and long-term care for more than 55 million people, according to the Kaiser Family Foundation. S-CHIP covers as many as 6 million children a year, mostly from low-income working families that earn too much to qualify for Medicaid. Washington may struggle to deal with demands for more money from California and other states, but some experts say federal policymakers in effect asked for it by taking little or no action to address the problems of the 47 million Americans who have no health insurance. "The reason this is being discussed in a serious way in Sacramento is because it really isn't being confronted in Washington," said Marian Mulkey, a health-insurance expert with the California HealthCare Foundation. "If (Washington) reacts negatively, it might just call the question of 'What do they want to do next?' What is Washington doing to address this, if this kind of state solution isn't workable?" Bush pledged in his State of the Union address last week to work with states to cover the uninsured. But he made no commitment for more federal money -- only redirection of some existing accounts. Overall, Schwarzenegger counts on federal coffers to provide about $5.5 billion of the $12 billion first-year cost of his plan. Of that federal money, state officials say, $3.7 billion would be new spending and the rest would be redirected from existing payments. California officials say the state is entitled to nearly all of the $3.7 billion in new spending under current Medicaid and S-CHIP rules. Medicaid is an entitlement program, meaning it
is not subject to Congress' annual appropriations process. Instead,
the federal government has committed by law to match state spending
within given limits. The coverage expansions that Schwarzenegger
is proposing for low-income children, pregnant women and some other
adults are within those limits, state officials say, as are "Given the fact that most of these things fall within the existing laws and rules, we hope that we'll ultimately be successful in securing the funding," said Joe Munso, deputy director of the California Health and Human Services Agency. "The federal government is a key partner in any of these solutions." However, Congress can change the underlying Medicaid law to cut spending on the program -- and it might come under pressure to do so, given that demands from California and other states are likely to add to the federal deficit. At the U.S. Health and Human Services Department, an official said it was not as simple as California sending the federal government a bill. "Any change (Schwarzenegger) makes is essentially a change in a contract," said the official, who asked not to be identified because the review process had not yet begun and the issue was considered sensitive. "No change can be made to the original state plan without an agreement from us." Pressure from the states ultimately might force Washington to act on health care. "We're not going to get a national health plan until two or three big states get plans of their own," said Rep. Pete Stark, D-Calif., chairman of the House Ways and Means health subcommittee. "Then big companies are going to come to Congress and say, 'Look, let's start to standardize this.' " Rick Wartzman As one might expect from somebody who has been in and around politics
most of her life, Hillary Rodham Clinton launched her campaign
by leavening the optimism with a bit of caution. Lynda Gledhill Gov. Arnold Schwarzenegger has said he wants to work in a "post-partisan" manner
with Republicans and Democrats to achieve universal health, but
his plans may get hung up on an arcane argument about whether funding
for his proposal comes from new taxes or new fees. Lisa Girion Big health plans share Gov. Arnold
Schwarzenegger's goal of trimming the ranks of the uninsured, but
they have their own ideas about how to do it — such as taxes
on cigarettes and service charges on patients every time they visit
a doctor. Deborah Burger One in an occasional series on Gov. Schwarzenegger's far-reaching health care proposal. With Sacramento poised to act on our escalating health care crisis, Californians have a right to expect we will finally achieve real reform of the present dysfunctional system. On closer inspection, there is a clear choice between two starkly divergent paths: the proposal by Gov. Arnold Schwarzenegger that would force many Californians to buy unaffordable, substandard health plans and pick your pocket for the insurance giants; or a simpler, more comprehensive bill by Sen. Sheila Kuehl, SB 840, that would assure all Californians are covered with one high standard of benefits and care, as opposed to good care for the wealthy only, establish effective cost controls, curb administrative waste, and end insurance industry interference with care. Sadly, the governor's plan could actually make the present mess worse, starting with the bid to require all individuals to buy health insurance without any controls on insurance premiums, drug or hospital charges or standards to affirm that individuals are getting more than junk insurance. The goal of health care should be to help people, not criminalize them. But with no check on rising premiums, and the governor even seeking to lift existing regulations on what insurance plans must provide, many Californians may end up saddled with cut-rate plans with limited benefits and that, Schwarzenegger suggests, include out-of-pocket deductibles of up to $7,500 per individual and $10,000 per family. In other words, the average Californian may well have to pay for all of his or her medical expenses in addition to the premiums the law forces them to buy. Or many could just forgo preventive care and other medical visits, resulting in more pain and suffering and greater costs down the road. That's not a universal health plan, it's a prescription for disaster, coupled with the proposed penalty that you could be barred from getting a job or enrolling your children in school for failure to comply, in addition to tax penalties or fines. But, for the big insurers, it's a huge windfall, hundreds of millions of dollars in additional profits from millions of new Californians required to buy insurance plans that may provide them little in return. Even many of the lowest-income Californians, intended to receive subsidies, could be mandated to spend more for their premiums than they can afford, and the state's legislative analyst is already suggesting that the governor is substantially exaggerating potential revenues to pay for this and his other spending plans. Further, the plan could actually encourage employers to drop benefits for currently covered employees. The proposed tax of 4 percent is less than the 9 percent to 11 percent many businesses now pay in benefits, again not counting ever-rising premium costs. Ultimately, the plan would further widen the gap between those who can afford comprehensive health plans and the rest of California and shift the risk and responsibility from insurers to individuals. There's a better way, the same course taken by every industrialized nation in the world, a single-payer system, such as Medicare, or a national plan, as we have for veterans. With a single-payer system, as in SB 840, one entity collects the revenue and pays for all health care services with adequate funding to our present private doctors, hospitals, clinics and other caregivers. Unlike the Schwarzenegger plan, under SB 840, everyone is guaranteed choice of physician, all individuals and businesses are treated equally, costs are controlled, and insurers could no longer deny care or continue to price people out of access to medical services. Americans want to believe we have the best medical system in the world, but we're only No. 1 in costs. By virtually all other indicators, including life expectancy, infant mortality, access to hospital beds and physicians, the United States trails most other industrialized nations. One of those is Austria, Schwarzenegger's birthplace, which he said last week he fondly recalls as a model because it covers everyone. It it's good enough for Austria, it should be good enough for California, too. By enacting SB 840 we can in California set a model for the nation and finally end this disgrace. Burger is president of the California Nurses Association Daniel Weintraub E. Richard Brown THERE'S A LOT to like in Gov. Arnold Schwarzenegger's healthcare reform proposal. It covers all 1.1 million uninsured children and most of the 5.4 million uninsured adults in California. It requires everyone to help pay for coverage. It makes some important fixes to the insurance industry, forcing insurers to sell coverage to everyone — including those with preexisting health problems — at the same rates. But, as written, Schwarzenegger's plan also is likely to put some middle-class families and individuals at substantial risk. The governor's proposal requires that all Californians carry health insurance and would create a statewide purchasing pool and subsidies for those least able to afford coverage. It also would force employers with 10 or more workers to provide health insurance that costs at least 4% of the company's payroll, or to pay an equivalent amount into the state's insurance fund. So employers have a cap on contributions — no matter how big their profits. The governor's proposal also would protect people with low and moderate incomes; employers' 4% contributions would help subsidize comprehensive health insurance for them. But the middle class has no such protection.A middle-class family whose employer provides no health benefits would not get a subsidy, nor would family members be able to buy coverage through the state purchasing pool — even if their employer paid into it in lieu of providing health benefits. Such workers, who would be mandated to carry insurance, would pay about $12,000 a year for comprehensive family coverage. Individual policies would cost about $4,500. That means that a typical family of four earning about $60,000 a year would spend about 20% of its income on premiums — not counting deductibles, co-pays and non-covered medical expenses. A catastrophic plan would cost less — perhaps $3,000 to $4,000 a year — but that family would still face a $5,000 deductible and an out-of-pocket limit of $10,000 a year. One hospitalization could easily hit that limit, again causing the family to spend about a fifth of its income on medical care. The governor's proposal also would probably degrade job-based insurance because the 4% minimum employer contribution is too low. The typical employer currently spends twice as much — about 8% of payroll — on health benefits. In essence, the plan encourages firms to replace comprehensive coverage with cheaper, high-deductible plans or opt out altogether and just pay into the state pool. There is a real risk that comprehensive health insurance plans would be forced into a death spiral as people who could bear the risk would select catastrophic coverage with their lower premiums. That would leave only the sickest to pay the rising premiums for comprehensive coverage — a pattern that undermines the very principle of health insurance: the pooling of risk. It's pooling risk that allows employers to get better deals on their group coverage, which is exactly why the state is creating its own purchasing pool. But middle-class workers without job-based insurance — a gap into which 2.9 million Californians fall — are barred from buying coverage through the state pool. They would have to shop for comprehensive coverage in the private health insurance market. The Legislature can fix these problems. First, individuals and families should get protection for their incomes through a cap on the percentage of income spent on health insurance premiums and out-of-pocket costs. Second, the share of payroll that employers would be required to pay for their workers' healthcare should be increased to a percentage close to the average that employers now pay. Third, everyone without job-based insurance should be able to get coverage through the state-run purchasing pool. Schwarzenegger has offered a bold proposal to fix a badly broken health insurance system, and it should not be derailed by these problems. The governor, working with the Legislature, can craft real solutions that give all Californians the health security they need. E. RICHARD BROWN is the founder and director of the UCLA Center for Health Policy Research and a professor at the UCLA School of Public Health Paul Krugman A few days ago. Gov. Arnold Schwarzenegger unveiled an ambitious plan to bring universal health insurance to California. And I’m of two minds about it. On one side, it’s very encouraging to see another Republican governor endorse the principle that all Americans are entitled to essential health care. Not long ago we were wondering whether the Bush administration would succeed in dismantling Social Security. Now we’re discussing proposals for universal health care. What a difference two years makes! And if California — America’s biggest state, with a higher-than-average percentage of uninsured residents — can achieve universal coverage, so can the nation as a whole. On the other side, Mr. Schwarzenegger’s plan has serious flaws. Maybe those flaws could be fixed once the principle of universal coverage was established — but there’s also the chance that we would end up stuck with those flaws, the way we ended up stuck with a dysfunctional system of insurance tied to employment. Furthermore, in the end health care should be a federal responsibility. State-level plans should be seen as pilot projects, not substitutes for a national system. Otherwise, some states just won’t do the right thing. Remember, almost 25 percent of Texans are uninsured. To understand both what’s right and what’s wrong with
Mr. Schwarzenegger’s plan, let’s compare what he’s
proposing with the plan he rejected. Last summer, the California
Legislature passed a bill that would have created a But the governor vetoed that bill, which would have bypassed private insurance companies. He appears to sincerely want universal coverage, but he also wants to keep insurance companies in the loop. As a result, he came up with a plan that, like the failed Clinton health care plan of the early 1990s, is best described as a Rube Goldberg device — a complicated, indirect way of achieving what a single-payer system would accomplish simply and directly. There are three main reasons why many Americans lack health insurance. Some healthy people decide to save money and take their chances (and end up being treated in emergency rooms, at the public’s expense, if their luck runs out); some people are too poor to afford coverage; some people can’t get coverage, at least without paying exorbitant rates, because of pre-existing conditions. Single-payer insurance solves all three problems at a stroke.
The Schwarzenegger plan, by contrast, is a series of patches. It
forces everyone to buy health insurance, whether they think they
need it or not; it provides As a result, the plan requires a much more intrusive government role than a single-payer system. Instead of reducing paperwork, the plan adds three new bureaucracies: one to police individuals to make sure they buy insurance, one to determine if they’re poor enough to receive aid, and one to police insurers to make sure they don’t discriminate against the unwell. The plan’s supporters say that it would save money all the same. Those who are currently uninsured would receive preventive care, which is often cheaper than waiting until they show up in emergency rooms. Insurers would spend less money trying to weed out high-risk clients and more money actually paying for health care: the plan would require that insurers spend at least 85 percent of premiums on health care, considerably more than most of them do now. Still, why all the complexity? The smart, well-intentioned economists who devised the plan think they’re being more politically realistic than single-payer advocates — that it’s necessary to placate the insurers. But that’s what Bill and Hillary Clinton thought, too — only to find that their plan’s complexity confused the public, while the insurance industry went all-out to defeat it anyway. So am I for or against the Schwarzenegger plan? That’s a tough question. As a practical matter, however, I suspect that the real question is what to do after the plan founders from its own complexity. And the answer is, damn the insurers — full speed ahead. Anthony Wright of Health
Access Sets new rules for insurer practices; requires employer contribution
to health care Gov. Arnold Schwarzenegger on Monday unveiled a detailed and sweeping proposal to cover all uninsured in California, emphasizing “shared responsibility” – between individuals, employees and government, as well as providers and insurers. Speaking from Los Angeles (because he is under doctor’s orders not to travel by plane more than once a week because of his broken leg), the governor said California has an opportunity “to make history, just like last year," referring to the passage of key legislation. See text of the governor’s prepared remarks here. The focus of the Governor's materials are threefold: 1) prevention, health promotion, and wellness; 2) coverage for all Californians; and 3) affordability and cost containment. In particular, the Governor's proposal focuses on removing the "hidden tax" of caring for the uninsured from the cost of private health coverage, by "creating an efficient, competitive market dynamic." The governor's health team estimates that his proposal could cut the "hidden tax'' that average families pay ($1,186) by half. To read the proposal, view his comments and other paperwork from the governor’s plan, visit the Health Access website at www.health-access.org/advocating/ref.htm. A core part of this plan is an individual mandate to purchase private coverage, with some public program expansions and subsidies for some low-income families, as well as rules on and contributions by employers, insurers, and providers. CONSUMER PERSPECTIVE Consumer and community groups were poring over the details since the announcement. Some of these provisions are proposals that consumer groups have long supported as stand-alone legislation, especially around setting rules on insurers and employers, and the expansion of public insurance programs for children and adults. But there lies significant concern about the placing of risk to the individual consumers and families, through the individual mandate as well as other components of the proposal. This is the beginning of the legislative year, and the Governor's proposal will need to be negotiated with members of the legislature, many of whom have their own proposals. The attention to health reform, and the Governor's new consensus with legislative leaders about the need for expanded public programs, and standards for employers and insurers, suggests that there is reason for optimism. Consumer advocates will need to be vigorous in opposing elements that are steps backward, pushing on provisions are steps forward but that don't go far enough, and keeping the urgency and visibility of this issue in the forefront, in the goal of winning reform that helps health care consumers. STEPS FORWARD: NEW RULES ON THE HEALTH SYSTEM 1) Universality: The plan sets the goal to ensure that all Californians have access to coverage and care, and the Governor has stated that this is his top priority this year. 2) Expansion of public programs: The proposal does expand Medi-Cal and Healthy Families, for children and adults. A) Adults without children at home living at or below the poverty level ($9800 for an individual; $13,200 for a couple) would now qualify for Medi-Cal--an expansion of 630,000 adults. B) Both Medi-Cal and Healthy Families would be expanded to cover all children up to 300% of the federal poverty level ($49,800 for a family of three; $60,000 for a family of four), regardless of immigration status. C) To comply with the individual mandate, subsidies to a state purchasing pool will be provided to low-income families (101-250%) to help purchase health coverage. While such coverage would be a comprehensive benefit package (Knox/Keene plus prescription drugs with a $500 hospital deductible), there would not have the protections in public programs, including vision or dental coverage, or cost-sharing limits. The premiums charged to these low-income individuals and families will be 3% of gross income for those 100-150% of Federal Poverty Level (or $9,800-14,700 for an individual, or $20,000-30,000 for a family of four); 4% of income for those 151-200% of FPL (or $14,700-19,600 for individual, $30-40K for a family of four); and 6% of income for those 201-250% of FPL (or $19,600-24,500, or 40-50K for a family of four). Many advocates for low-income consumers would prefer public program coverage, and at least much lower financial burdens. In addition, there is significant concern about the need for assistance for those over 250% of the FPL ($25,000 for an individual, $50,000 for a family of four.) D) The plan also proposes increasing Medi-Cal rates for providers,
hospitals, and health plans, which is likely to have a positive
impact for those on Medi-Cal to have access to care by
these providers. Some of these increases would be tied to "pay-for-performance" measures. A) The plan would set the principle ("guaranteed issue") that nobody should be denied coverage because of their health status--so-called "pre-existing conditions." B) A related provision ("community rating") would prevent insurers from setting different rates based on health status or anything other than age or geography. C) Finally, the plan would require insurers to dedicate 85 cents of every premium dollar to health care. While HMOs are already required to meet that threshold (known as a "medical loss ratio"), PPOs now spend as little as 50 cents per premium dollar on actual health care. D) There will be a mandated minimum in the open insurance market limiting deductibles to $5,000, and out-of-pocket costs to $7,500 for an individual and $10,000 for a family. While there is no out-of-pocket cost maximum now, such costs still would place a insured person in medical debt and risk for bankruptcy. 4) Employer Contribution: The plan does require employers with 10 or more employees to contribute to the health care system, to either provide some coverage or pay 4% of the payroll. While this employer "in lieu" fee is projected to raise $1 billion as part of the plan, it does not set a standard for on-the-job health benefits. According to the March 2005 Current Population Survey, employers now spend an average of 7.2% of their total payroll on health care and slightly over 10% of the payroll of those for whom they provide coverage. (Wal-Mart, for example, which now spends 7% of payroll, would not have to increase coverage or spend any more.) Also, since the fee is assessed as a broad aggregate of health spending, and not on a per-worker basis, an employer that provided very good benefits to management or long-time workers but little or nothing to new or part-time workers could still meet this low threshold. Unless the requirement were signficantly more and differently structured, this would not provide greater security to the 19 million Californians who now get coverage through employers. STEPS BACK: NEW RISKS FOR CONSUMERS While the theme of the proposal is "shared responsibility," the focus of the responsibility is on individual consumers. Based on what was proposed on Monday, patients and workers bear a disproportionate amount of risk. * The individual mandate: The core of the proposal--the individual
mandate--is something that has been opposed by consumer groups as
unwarranted, unworkable, and unwise. Unlike the many health plans
supported by consumer and community groups in the last several
years, which have people share--and in many cases required to share--the
cost and burden of health care (at the worksite, through public
programs, or through a universal system), an individual mandate
places the financial and legal risk and burden of coverage on individual
patients and families. Some of the other provisions attempt to mitigate these problems, but they don't provide the protections regarding the ability to pay, or provide a defined benefit of value. Most importantly, there is concern that the individual mandate would actually undermine the group coverage that many have now, especially through employers. Health Access California has a paper regarding individual mandates at: http://www.health-access.org/expanding/ind_mandates.htm Under the plan, everyone must prove they have health care insurance,
with some limited assistance to low-income families, but beyond
that with no consideration for ability to pay. Some specific issues: * Concern about the safety net The proposal takes half of the
money ($2 billion) that currently goes to public hospitals to pay
for their care of uninsured patients. Even with more insured people,
this could provide huge problems for key public hospital that we
all rely on, yet which have been chronically underfunded. For example:
Kern and Monterey Counties , which have been teetering on closure;
San Francisco, which relies on San Francisco General and network
of clinics to administer its not-yet-implemented Health Access
Program for universal access, and in Los Angeles King-Drew
hospital, which has had its own set of issues, and LA County/USC
Medical Center. The closure of any public hospital would be
hugely damaging for all Californians, who rely on trauma centers
and emergency rooms in their community to provide care when they
need it. * A review of of health plan benefits, provider, and procedural mandates could be a threat to key consumer protections, such as the HMO Patients' Bill of Rights. The plan also considers "the elimination of unnecessary health plan reporting requirements," which may be a concern for consumer advocates. * Some low-income patients may lose some protections: While the proposal does significantly expand Med-Cal coverage, it also shifts Medi-Cal recipients (excluding pregnant women) over the poverty level ($9800 for individual, $20,000 for a family of four) to other public programs, including Healthy Families and that have some fewer benefits and protections. This would impact 680,000 children and 215,000 adults. * The proposal also encourages underinsurance and high-deductible plans, by offering a state tax break for Health Savings Accounts (which are only available for high-deductible plans). While employers aren’t paying enough, individuals would pay too much. The governor’s plan would establish a “minimum benefit package’’ requiring people who must buy insurance on their own to have at least a $5,000 deductible plan. Health Savings Account holders would get a tax credit, taking money away from state coffers to provide access to health care. OTHER PROVISIONS Contrary to predictions that the plan would be small or vague, the proposal also is broad and detailed (although there are some questions that are not answerable, given that it is not in legislative language.) There are other major components that Health Access and other groups will be looking at in the weeks to come, including: * Structuring benefits and providing incentives to promote prevetion and wellness, including a "Healthy Actions" requirement on public programs and to be offered in the private market to provide rewards and incentives. * Major efforts and campaigns to focus on diabetes, obesity, and tobacco use. * An effort to prevent medical errors, including requiring electronic prescribing of medication by 2010 and require new reporting of health safety measures at health facilities. * Requiring employers to provide (but not fund) a Section 125 plan so their workers can use pre-tax dollars to pay for premiums of insurance in the individual market. * A effort to reduce "regulatory barriers," including allowing the growth of retail-based medical clinics by making scope-of-practice changes for nurse practitioners and physician assistants. * A new "'worst first' system of hospital conformity to seismic safety requirements. * A new "24-Hour Coverage" pilot program for CalPERS (with opt-in for pricate sector) to coordinate worker's compenation with traditional group health coverage. * A major Health Information Technology effort, which includes the adoption of standardized Personal Health Records, and a major focus on tele-health and tele-medicine. IT’S ONLY THE BEGINNING OF A RENEWED DEBATE What the governor proposed Monday is clearly only the beginning. In his announcement, he invited several people from a range of sources, to comment and critique his proposal. The range of views was as disperate as the panelists. To view the panel and the announcement, visit the Governor's web site at: http://gov.ca.gov/index.php?/press-release/5057/ Health Access will continue to analyze this plan and provide you with updates in the coming days. For more information, contact Hanh Kim Quach, hquach@health-access.org, or 916-497-0923. Los
Angeles Times Editorial Back to Top Jordan Rau SACRAMENTO — Calling for massive changes throughout a healthcare system he called "broken," Gov. Arnold Schwarzenegger on Monday proposed a $12-billion plan that would require all Californians to obtain medical insurance while helping the poorest to afford it. The plan, which both critics and supporters called the most audacious
in the country, would dramatically reshuffle the financial underpinnings
of an already fragile industry. The governor said his plan would
control spiraling health costs while ensuring coverage for the
quarter of a million children and 5.6 million adults who lack insurance. "Everyone in California must have health insurance," Schwarzenegger said via teleconference from Los Angeles, where he is recuperating from a broken leg. "If you can't afford it, the state will help you buy it, but you must be insured." Only Massachusetts has required all residents to carry insurance, but California's larger population of uninsured and poor makes Schwarzenegger's goals much more challenging. To pay for the plan, Schwarzenegger proposed placing new fees and obligations on doctors, hospitals, employers and insurers — all powerful lobbies in Sacramento. Schwarzenegger was widely praised for tackling such a huge issue so comprehensively. But many leading consumer advocates, academics and business leaders said they feared that the governor's proposal was inadequately financed and would shift more responsibility for healthcare to families while unintentionally encouraging businesses to drop or downgrade the coverage they now offer. Employers with 10 or more workers would have to offer plans that cost them at least 4% of their payroll. Those who refuse would be required to pay an equivalent amount into the state's insurance fund for people with no other option. That mandate, while greeted skeptically by businesses, was criticized as too lax by advocates who said that a majority of companies that now provide insurance already contribute much more money. "It's the equivalent of setting the minimum wage at $3 an hour," said Anthony Wright, executive director of Health Access California, a consumer advocacy group. Those earning more than 2 1/2 times the federal poverty level — a total of $41,500 a year for a family of three — would not receive a subsidy but would still have to buy insurance if their employer did not offer it. The cheapest plan would require families to pay $2,000 a year in premiums, and as much as $10,000 in out-of-pocket medical costs. "By setting this as a minimum, the tendency will be to undermine and reduce the current level offered by some employers, who will use this to justify reducing their benefits much more," said E. Richard Brown, director of the UCLA Center for Health Policy Research, who nonetheless called the proposal "very impressive" in its reach. Steven A. Burd, chairman of the Safeway grocery chain, who was invited by the administration to comment on the proposal, also lauded the effort but said it did not ask enough of employers. Their required contribution, he said, "is frankly too low and should be higher." The plan was welcomed by the Democrats who control the Legislature, which must approve any proposal. Assembly Speaker Fabian Nuñez (D-Los Angeles) called it "good work" and "a good start." But he said that he could not agree to requiring everyone, whether working or not, to obtain health insurance "until and unless we solve the problem of the costs of the premiums." Schwarzenegger's fellow Republicans showed little enthusiasm for the plan, saying that the governor's strategy of funding it through mandated employer contributions and assessing a portion of earnings of doctors, hospitals and health plans violated the anti-tax cornerstone of his reelection campaign. Republican opposition "If we put any form of mandate on a business, we are seeing a jobs tax," said Assembly Republican leader Michael Villines of Clovis, echoing the argument that Schwarzenegger himself made in 2004 when he successfully campaigned against Proposition 72. That Democratic plan would have required employers to provide health insurance or pay into a state fund. The administration insisted that its plan did not include taxes, instead labeling the levies "coverage dividends." The debate is more than semantic: A measure with taxes needs two-thirds support in the Legislature, giving the GOP veto power. Otherwise, it needs only a simple majority that could be obtained solely with Democratic votes. Another part of the plan provoking Republican resistance would provide healthcare for impoverished children who are in the United States illegally. Senate Republican leader Dick Ackerman of Irvine called such a provision a "nonstarter." The governor said emergency rooms are required by federal law to treat anyone who shows up, regardless of status. "So the decision for my team was, do we treat them in emergency rooms at the highest cost available or do we do it right and do it efficiently?" he said. The plan, which has been anticipated for weeks as the governor's biggest initiative of the year, gave virtual coronaries to leaders of California's hospitals, doctors' groups and insurers — the most politically influential players in a $169-billion industry that spends $22 million annually on lobbying in Sacramento. The guiding philosophy of Schwarzenegger's plan was that fixing California's healthcare system was a responsibility to be shared, and the complex plan gave each sector some benefits that are offset by new burdens. He proposed a $4-billion annual increase in Medi-Cal reimbursements, which are among the lowest in the nation. That would help hospitals and doctors who treat many poor people, and encourage more providers to participate in the program. But doctors also would have to pay 2% of their gross earnings back to the state to help expand coverage. The physicians' lobby said many doctors would simply pass that cost on to patients and insurers through higher bills. If all Californians were indeed covered under his plan, hospitals would be able to bill insurance for the costs of the uninsured they must absorb now. But hospitals also would have to pay 4% of their earnings back to the state, and would lose $2 billion they now get from the government for uncompensated care. "I did get a little bit of pain in the side when I heard that part," said Jim Lott, executive director of the Hospital Assn. of Southern California. And hospitals may still have to deal with uninsured patients. The homeless, unemployed and illegal immigrants might not obtain insurance even if fully subsidized, and the administration plans to enforce the mandate through the state's income tax boards. Insurers would receive a huge business boon, since the mandate for coverage would provide them with a captive audience, but without having their rates regulated as those of auto and home insurers are. The governor would require insurers to offer coverage to all people regardless of their health, and would limit to 15% the amount of premiums insurers could spend on administration and keep as profits. Much of Schwarzenegger's plan was designed to allow the state to qualify for $5.5 billion in additional federal money. But many questioned whether, even with that boost, the contributions from employers would be enough to allow workers to buy anything more than bare-bones catastrophic coverage. Premiums rising Healthcare premiums have been rising at the rate of 8.2% annually, nearly twice the rate of wage growth. Yet employers would pay only 4% of their payroll amounts, something that disturbs both labor and business leaders. "How will the inevitable shortfall in funding be addressed?" asked Allan Zaremburg, president of the California Chamber of Commerce. "Will the tax have to be doubled in 10 years?" The proposal was devised by a team of policy experts who were hired last year specifically for that task. They spent months interviewing representatives of all segments of the healthcare industry across the nation. But the final decisions were delayed until Sunday night because of Schwarzenegger's injury, which occurred in a skiing accident Dec. 23. All of the plan's details can be altered and its questions can be resolved in negotiations with lawmakers, and Schwarzenegger said he looked forward to forging a bipartisan agreement as he had last year with a massive public works building project. But because so many parts of Schwarzenegger's plan hinge on one another, deleting the areas of greatest disagreement could unravel the entire plan. "Health insurance reform is as delicate as an egg," said Jamie Court, president of the Foundation of Taxpayer and Consumer Rights, a Santa-Monica based watchdog group. "One little crack and the egg is lost." Plan to ensure health coverage could
raise costs
But the measure could come at a cost, analysts said. Health plans could face sharply rising expenses if they were inundated with customers who were generally in poorer health than their current enrollees. The health plans could respond by raising premiums or leaving the market, as they have in other states that require insurers to sell coverage to everyone. And that could make it difficult for consumers to heed another part of Schwarzenegger's proposal: that they must buy health coverage. "I'm worried that if we don't have limits on how much insurance companies can charge, people aren't going to be able to afford healthcare," said Scott Svonkin, chairman of the Los Angeles County Commission on Insurance, who was rejected for insurance by three health plans last year. Under current rules, insurers selling individual insurance — the type of coverage purchased by people who do not have job-based group health benefits — are free to choose whom to cover and what to charge. That has led to a system, documented in a series of Times articles, in which people seen as too medically risky are denied coverage and others risk having their insurance canceled after they run up high medical bills. The governor's plan would bar insurers from rejecting customers for any reason and would allow health plans to set premiums based only on how old a customer is and where he or she lives. "Right now we have insurance companies that pick and choose who they cover," Schwarzenegger said. "They turn away people who are sick or past a certain age. My plan would put an end to that and not allow insurers to deny coverage to people because of age or health status." Cindy Ehnes, director of the Department of Managed Health Care, which oversees health plans, said the proposal would "eliminate that long-standing barrier to access to individual coverage, which is if you need it, you can't get it." The plan would help people such as Susan Jarett. The Realtor, 59, said she took a full-time job as a synagogue receptionist in November for the health benefits after an insurer turned her down, citing menopause, allergies and other common but not catastrophic conditions. "It should be mandatory that insurance companies insure everyone," the Oak Park woman said. "The older we get, the more we need it." The governor's proposal includes several features designed to hold down premiums and underlying medical costs, including eliminating red tape and promoting prevention. It also would require health plans to spend at least 85 cents of every premium dollar on medical care, effectively capping the portion that may go to overhead and profits. Currently, some health plans spend less than 80% of premium revenues on medical care. The plan also could hold down costs by significantly expanding the health plans' customer base by requiring individuals to buy insurance and forcing employers of 10 or more people to provide coverage. Insurers "will benefit because mandatory insurance means private carriers will have 4 to 5 million new customers," Schwarzenegger said. Bruce Bodaken, chairman of Blue Shield of California, who supports universal coverage, praised the governor's proposal, calling it visionary. A spokeswoman for Kaiser Permanente said the state's largest HMO could support much of the plan, depending on the details. Kaiser, she said, already exceeded the proposed medical spending ratio. HealthNet Inc. has "concerns with some of it, but overall we are very supportive of the effort," spokesman David Olson said. Blue Cross of California parent WellPoint Inc., the state's largest seller of individual coverage, faulted some aspects of the plan. Requiring individuals to buy insurance would be tough to enforce, spokeswoman Shannon Troughton said. "There is already an individual mandate for auto insurance in California, and an estimated 25% of drivers in the state do not have coverage," she said. "The bottom line is that healthy, uninsured individuals are not likely to respond to a government mandate." In addition, she said, in New Jersey, where everyone is guaranteed access to health coverage, premiums for individual insurance are three times higher than in California. The medical spending ratio also is problematic because "administrative costs are largely fixed costs that do not vary with premiums," Troughton said. "Therefore, products with lower premiums naturally have a higher percentage of revenue attributable to administrative costs." As a result, Troughton said, too high a medical spending ratio could hinder health plans' ability to offer some of their lower-priced products. Also, she said, much of insurers' administrative efforts help control costs, such as disease management, care management, anti-fraud efforts and information technology. Gerald Kominski, a healthcare economist at UCLA, said that based on other states' experiences, Schwarzenegger's proposal was likely to result in a "fairly major shake-out" of health plans. "Right now health plans can choose to ignore the riskiest individuals and have medical loss ratios as low as 50%," he said. "This is not going to favor companies that are currently in that position, and it may lead to a consolidation." Chris Ohman, president of the California Assn. of Health Plans, said the group was still analyzing the potential effect of the proposal, including whether it would force premiums up. The biggest problem, Ohman said, would be if the proposal passed in pieces. If health plans were required to take all comers, but individuals were not required to buy coverage, people who were sick and needed care would flood the market, forcing premiums up to cover their costs. "If it's 'Let's treat this as an a la carte menu,' the plan breaks apart," Ohman said. "We have to be very mindful of that." But consumer advocates said they would push for guaranteed access even if the whole package got bogged down. They said requiring insurers to spend a certain ratio on medical care was not an effective way to control premiums, and without consumer price protection, they would not support an individual mandate. "It's far more reasonable to make health insurance more available to more people at a reasonable price than to force them to buy it at any price," said Jamie Court, president of the Foundation for Taxpayer and Consumer Rights. PRESS RELEASE With 6.5 million Californians uninsured for all or part of the year - more than any other state in the nation - Gov. Arnold Schwarzenegger today shared his comprehensive plans to reform California's broken health care system by addressing the hidden costs that result in billions of dollars in higher premiums and taxes. In a speech before hundreds of stakeholders, Gov. Schwarzenegger articulated why the broken system is in desperate need of repair. "More than 60 emergency rooms have closed over the past decade because they didn't want to keep treating people without insurance. Unpaid medical bills mean billions of dollars in hidden taxes for the rest of us because those services all have to be paid for. So we pay higher deductibles, costs for treatment, premiums and co-pays," said Gov. Schwarzenegger "Companies stop offering coverage, which leads to more people without insurance and the whole cycle keeps repeating. Nearly three million people in California whose jobs do provide coverage turn it down because they think they're healthy and don't need it, or they don't want to pay their share of ever-higher premiums. We have to aim high and attack the entire system from top to bottom. We can create a model the rest of the nation can follow." Gov. Schwarzenegger also talked about the drain on the state's economy caused by health care premiums growing more than twice as fast as prices overall or workers' earnings, as reported in a recent study by the Health Research and Educational Trust and the Kaiser Family Foundation. A recent New America Foundation white paper estimates the average family pays about $1,186 a year in "hidden taxes" through health insurance premiums to cover the uninsured. According to the Centers for Disease Control and Prevention, chronic illnesses - such as cardiovascular disease, cancer and diabetes - are responsible for $445 billion in direct medical costs and $409 billion in lost productivity nationally. The Governor's health care reform proposal will reduce the hidden tax, lower costs, support better care and create a healthier California through three essential elements of reform: * Prevention, health promotion, and wellness "The Governor's plan recognizes that health coverage for all Californians will benefit all Californians," said California Health and Human Services Secretary Kim Belshé. "Just as all sectors of society share in the benefits of coverage for all Californians, we have to share responsibility across the board. Fixing our broken health care system requires changes from all of us - individuals, government, doctors and hospitals, insurers and employers." All of the details of the Governor's plan are found at www.gov.ca.gov. The Governor's proposal is built on "shared responsibility, shared benefit" where every segment of the healthcare system realizes a benefit and has some responsibility. Highlights include: Securing health coverage: All Californians will be required to have health insurance coverage. Coverage must be substantial enough to protect families against catastrophic costs as well as minimize the "cost shift" that occurs when large numbers of persons are receiving care without paying the full cost of that care. By ensuring all Californians are insured, this proposal will stop burdening those with health coverage from paying the bills of those without insurance. Guaranteeing coverage: Insurers will be required to guarantee coverage so that all individuals have access to affordable products. Californians will no longer live in fear of losing their health coverage. Encouraging personal responsibility for health and wellness: Implement "Healthy Action Incentives/Rewards" programs in both the public and private sectors to encourage the adoption of healthy behaviors. Californians, who take personal responsibility to increase healthy practices and behaviors, thereby reducing their risk of chronic medical conditions and the incidence of infectious diseases, will benefit from participation in this groundbreaking program. Providing low-income individuals affordable coverage: Very low-income Californians will be provided expanded access to public programs, such as Medi-Cal, and lower-income working residents will be provided financial assistance to help with the cost of coverage through a new state-administered purchasing pool. Increasing Medi-Cal rates significantly: To reduce the "hidden tax" associated with low Medi-Cal reimbursement and to encourage greater provider participation in the Medi-Cal program, increase Medi-Cal rates for providers, hospitals and health plans. Improving insurer and hospital efficiency: Require health plans (HMO's), insurers and hospitals to spend 85% of every premium dollar on patient care. Enhancing Tax Breaks for Individuals and Employers for the Purchase of Insurance: Align state tax laws with federal laws by allowing persons to make pre-tax contributions to individual health care insurance Health Savings Accounts. In addition, require employers to establish "Section 125" plans so that employees can make tax-sheltered contributions to health insurance and save employers additional FICA contributions. Contributing to the cost of coverage: Increased Medi-Cal rates and eliminating the uninsured will direct $10-$15 billion in new money to hospitals and doctors. Therefore, a coverage dividend of 2% on doctors and 4% on hospitals will be assessed to help cover the increased Medi-Cal rates. Employers of 10 or more (small businesses, which make up 80% of California business, are exempt) who do not provide coverage will pay an "in-lieu fee" of 4% of payroll. Without this fee, the system will see "crowd-out," a system creating an incentive for employers to drop coverage. "My proposal is a beginning. I look forward to a vigorous and open debate. Everything will be on the table and I want to hear from everyone. If we have the will - and I believe that we do - we can heal our broken system," said Gov. Schwarzenegger. |