Analyst Warns Against Funding Shortfall in Health Reform Plan
The Legislative Analyst's Office on Thursday told the Senate Health Committee that Gov. Arnold Schwarzenegger's (R) health care reform proposal underestimated its cost by $150 million to more than $3 billion, the Sacramento Bee reports. The testimony came during the first legislative committee hearing on the governor's plan (Benson, Sacramento Bee, 2/16).
Under Schwarzenegger's plan, Medi-Cal and Healthy Families would be expanded to help provide coverage to low- and moderate-income state residents. Insurers would be required to provide coverage to all individuals, regardless of pre-existing medical conditions or age. Individuals who declined to carry insurance could face a reduction in state income tax refunds or have wages withheld.
The $12 billion plan also relies on federal funding and mandatory contributions from employers, individuals, insurers and medical providers. The governor said his plan will save $10 billion annually by reducing costs and redirecting state money already in the health care system (California Healthline, 1/9).
Marcus Stanley of LAO said the plan would cost more if:
- Health care costs outpace inflation;
- Insurance company premiums are higher than expected;
- The number of uninsured residents was underestimated (Sacramento Bee, 2/16).
Stanley said that $1 billion of the $5.5 billion in new federal funding under the plan would require a new agreement with the federal government. Another $350 million would require Congress to reauthorize support of hospitals that provide care to underserved patients.
However, Herb Schultz, senior adviser to the governor on health care, said that based on recent talks with federal officials, only $250 million would require new agreements (Chorneau, San Francisco Chronicle, 2/16).
The plan requires insurers to offer coverage to everyone, but several members of the legislative committee said the plan does not guarantee that the coverage must be affordable (Herdt, Ventura County Star, 2/16). If the plan took effect, insurers noted that premiums mostly would depend on the type of population they would be required to cover (Sacramento Bee, 2/16).
Stanley said that monthly premiums for insurance through the plan's state pool likely would be higher than the governor's $224 estimate.
Kim Belshé, secretary of the Health and Human Services Agency, said that the plan is adequately funded and that the LAO analysis did not factor in potential savings once the plan takes effect (AP/Contra Costa Times, 2/16). Belshé disagreed with the concern over premium costs, saying that premiums for working families would be affordable because more people would be participating in the system (Sacramento Bee, 2/16).
Although he did not attend Thursday's health committee hearing, Gov. Schwarzenegger pushed the issue of health care reform in his keynote speech to the National Pay for Performance Summit in Los Angeles.
The governor discussed his health care reform proposal and answered questions about state-based efforts, health care costs and other issues.
The full text and video of the segment are available on the governor's Web site (Office of the Governor release, 2/15).
Summaries of opinion pieces regarding health care reform proposals appear below.
- Mike Duvall, Capitol Weekly: Requiring every Californian to obtain health insurance coverage and insurers to cover everyone "is the wrong approach" to health care reform, Assembly member Mike Duvall (R- Brea) writes in a Capitol Weekly opinion piece. "It won't make it easier for working families to afford health insurance, and it won't lower costs," Duvall writes. He recommends reducing state requirements for services insurers must cover and using tax benefits to encourage residents to buy health insurance (Duvall, Capitol Weekly, 2/15).
- Ted Gaines, Sacramento Bee: "With so much at stake, I believe lawmakers should conduct a full diagnosis of our state's health care problems before even considering massive government programs or costly tax hikes that may make matters even worse," Assembly member Ted Gaines (R-Roseville) writes in a Bee opinion piece. "Instead of creating massive new government programs that will bust the budget, government and business can work together to lower costs and reduce the uninsured population in a fiscally responsible matter," Gaines writes (Gaines, Sacramento Bee, 2/15).
- Theodore Mazer, San Diego Union-Tribune: The San Diego County Medical Society is "excited about many aspects" of the governor's proposal, Theodore Mazer, the society's president, writes in a Union-Tribune opinion piece. However, "there are many details that must be modified so that physicians and hospitals are providing a fair, proportionate contribution, as opposed to an unfair and seriously disproportionate tax," Mazer writes (Mazer, San Diego Union-Tribune, 2/16).
KCRW's "Which Way, L.A.?" on Thursday included a discussion on the committee hearing. Guests on the program include Clea Benson, a Capitol reporter for the Sacramento Bee (Onley, "Which Way, L.A.?" KCRW, 2/15). Audio of the segment is available online.This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.