Democratic Health Care Reform Plans Advance in California

The Senate and Assembly on Thursday approved bills by Senate President Pro Tempore Don Perata (D-Oakland) and Assembly Speaker Fabian Núñez (D-Los Angeles), respectively, to overhaul California's health care system, the San Jose Mercury News reports.

Both pieces of legislation, approved without any Republican votes, were passed on to the other chamber (Zapler, San Jose Mercury News, 6/8).

Each measure would require employers to contribute 7.5% of payroll to health care coverage or pay into a state fund that would provide coverage. Núñez's overhaul legislation (AB 8) does not state a maximum percentage for workers' contribution to health coverage, but Perata's bill (SB 48) would cap workers' contribution at 5% of income.

Núñez's measure would exempt businesses that have been operating less than three years and those with a payroll of less than $100,000. Self-employed individuals also would be exempt. The plan is projected to cost $8.3 billion.

Under Núñez's plan, families with incomes that do not exceed 300% of the federal poverty level would be eligible for state subsidies for health coverage.

Perata's bill would require all working California residents and their dependents with household incomes that exceed 400% of the poverty level to obtain a minimum health insurance policy.

Each plan would cover about 70% of uninsured residents in California (Sanders, Sacramento Bee, 6/8).

Meanwhile, the nonpartisan legislative counsel's office on Thursday concluded that a key provision in Gov. Arnold Schwarzenegger's (R) health care overhaul plan is a tax, not a fee as the governor's plan characterized the proposal.

The governor's plan calls for physicians and hospitals to contribute a percentage of revenue toward the cost of coverage. The proposed contributions would raise $3.5 billion annually.

A tax would require two-thirds approval from the Legislature, including some votes from Republicans who remain opposed to the contributions. A fee requires only a simple majority vote for approval in the Legislature.

Adam Mendelsohn, spokesperson for Schwarzenegger, said the ruling by the legislative counsel is insignificant because the governor has not submitted his proposal as a bill. He added, "You can't definitely say what it is and what it is not."

Schwarzenegger's administration for several months has been trying to garner support from hospitals and physicians, and a deal with the hospital industry is close, according to people familiar with the negotiations. However, physician groups continue to oppose any mandatory contributions.

Health care reform proposals offered by Republican lawmakers were voted down by the Democratic majority in both chambers (Rau, Los Angeles Times, 6/8).

Assembly Minority Leader Mike Villines (R-Fresno), however, said his party would support Democratic proposals for guaranteed health care coverage to all California children. He also said Republicans would support using state revenue to expand public subsidies to individuals who are rejected for private insurance because of pre-existing health conditions (Los Angeles Times, 6/8).

Sen. George Runner (R-Lancaster) said the state should favor incentives to employers to help control rising health care costs. He added that the state should promote health savings accounts and reduce limitations for health care coverage that increase costs (Thompson/Young, AP/Ventura County Star, 6/8).

The Democrats' bills stand a greater chance of passing in the Legislature than Schwarzenegger's plan, but legal limitations might prevent the measures from winning approval, according to the Times (Los Angeles Times, 6/8).

Republicans said the employee mandate is illegal under the 1974 Employee Retirement Income Security Act.

Assembly member Todd Spitzer (R-Orange) said the federal law prohibits states from requiring employers to set aside contributions to health care coverage.

Sen. Tom McClintock (R-Thousand Oaks) said if the state cannot legally require business contributions, California taxpayers would be forced to pay $10 billion annually (AP/Ventura County Star, 6/8).

Mendelsohn said, "This is exactly the place the governor would hope we would be at this point, which is a statewide dialogue about health care, the table being set for us to work on legislation this summer that will comprehensively reform California's health care system" (Los Angeles Times, 6/8).

Villines said it is unlikely that universal health care coverage could become law this year. "We might be able to get there someday, but I think it's a pretty big bite of the apple to take in one year" (San Jose Mercury News, 6/8).

Anthony Wright, director of Health Access California, supported the approval of both plans but said that "more needs to be done to guarantee that coverage will be affordable to consumers" (Sacramento Bee, 6/8).

According to the San Francisco Chronicle, the health care reform debate's "focus now is on the negotiations between the governor and Democratic leaders."

As such, Sen. Sheila Kuehl (D-Los Angeles) has said she might move to delay consideration until next year of her bill (SB 840) to create a state-run, single-payer health care system in California. The Senate approved the measure earlier this week (Chorneau, San Francisco Chronicle, 6/8).

Nonetheless, other measures to rework the way Californians get health care moved forward on Thursday. For example, the Assembly approved AB 1 by Assembly member John Laird (D-Santa Cruz) to provide coverage to nearly all uninsured children by expanding eligibility for government health care programs (Geissinger, San Jose Mercury News, 6/8).

The Assembly also voted to pass a bill (AB 1554) by Assembly member Dave Jones (D-Sacramento) to require health insurers to submit proposed rate increases for annual approval by state regulators (Sacramento Bee, 6/8).

"The timing has never been more auspicious for health care reform in both California and the nation," David Lazarus writes in his San Francisco Chronicle column. However, most health care reform plans "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," according to Lazarus.

Sen. Sheila Kuehl's single-payer measure "would be a start, and it would demonstrate for the rest of the country that universal coverage is both politically and economically feasible," Lazarus writes. Lazarus calls for the bill to be offered as a ballot measure, writing, "Let the people decide" (Lazarus, San Francisco Chronicle, 6/8).

Three broadcast program this week reported on votes on health care reform legislation in the Senate and Assembly. Summaries appear below.

• Capital Public Radio's "KXJZ News": The segment includes comments from Núñez, and Assembly member Roger Niello (R-Sacramento) (Russ, " KXJZ News," Capital Public Radio, 6/7). A transcript and audio of the segment are available online.
• KPBS' "KPBS News": The segment includes comments from Donna Gerber of the California Nurses Association (Goldberg, "KPBS News," KPBS, 7/7). A transcript and audio of the segment are available online.
• KPCC's "KPCC News": The segment includes comments from Núñez and Niello (Small, "KPCC News," KPCC, 6/7). A transcript and audio of the segment are available online.