Business Groups Weigh Implications of Governor’s Proposal
Provisions of a health care reform proposal by Gov. Arnold Schwarzenegger (R) could spur adoption of health savings accounts in California, Investment News reports (Hansard, Investment News, 1/22).
Under the governor's plan, Medi-Cal and Healthy Families would be expanded to help provide coverage to low- and moderate-income state residents. Individuals who decline to carry insurance would face a reduction in state income tax refunds or have wages withheld.
The $12 billion plan would require contributions from employers, individuals, insurers and medical providers (California Healthline, 1/19). The plan also would make contributions to HSAs exempt from state income taxes.
Kevin McKechnie -- staff director of the Health Savings Account Council, a unit of the American Bankers Association -- said, "The fact that the state is now making the choice to allow HSAs to be a real option means the people who are buying health insurance are going to be able to buy a more advantageous product than was previously the case."
However, a Congressional health care policy analyst who spoke on condition of anonymity, said that a provision of the governor's plan that requires employers to contribute at least 4% of payroll to workers' health benefits encourages "employers to drop coverage to these very basic levels," adding, "It definitely does push people toward HSAs." The aide said that California employers spend about 12% of payroll on health insurance.
John Ramey, a health care policy adviser to Schwarzenegger, attributed the slower adoption of HSAs in California in part to the managed care penetration in the state, but said that "the growth in HSAs has been steady and this would contribute to that" (Investment News, 1/22).
Meanwhile, health plans such as Blue Shield and Kaiser Permanente agree with the governor's goal to extend heath insurance coverage to all residents, but the insurance providers say the proposal must guarantee that coverage would be mandatory for all individuals, the Los Angeles Times reports.
Health plan executives say that without a requirement, healthy individuals would have no incentive to obtain coverage, creating a risk pool of sick policyholders that "would be doomed to fail," according to the Times.
WellPoint, owner of Blue Cross of California, released a proposal earlier this month that would expand coverage to more children and low-income adults but would not provide universal coverage.
Kaiser Permanente CEO George Halvorson last month unveiled a plan that would require employers to provide coverage or contribute to a fund for uninsured individuals.
Blue Shield of California CEO Bruce Bodaken in 2002 released his own reform plan that calls for universal coverage, including requirements that employers provide coverage and individuals obtain coverage (Girion, Los Angeles Times, 1/22).