Governor Presents Reform Proposal to Business Leaders
Gov. Arnold Schwarzenegger (R) on Friday told members of the Los Angeles Area Chamber of Commerce that his health care reform proposal would lower insurance premiums for employers and eliminate a $14.65 billion "hidden tax" that most businesses pay to subsidize treatment costs for uninsured patients, the San Francisco Chronicle reports (Colliver, San Francisco Chronicle, 1/20).
The governor's meeting was the first in a series with business leaders, consumer groups, labor unions and health care officials to discuss the details of his proposal. Schwarzenegger said the proposal is a "blueprint" and expects revisions if the plan is adopted by the Legislature this year, according to the Los Angeles Times (Yi, Los Angeles Times, 1/20).
Under the plan, Medi-Cal and Healthy Families would be expanded to help provide coverage to low- and moderate-income state residents. Individuals who declined to carry insurance could face a reduction in state income tax refunds or have wages withheld (California Healthline, 1/19).
The plan requires employers with at least 10 workers to contribute at least 4% of payroll into a state fund if they do not provide insurance coverage (Yamamura, Sacramento Bee, 1/20).
According to the governor's office, employers that provide insurance coverage pay about 17% more in premiums to subsidize the cost of uninsured patients and insufficient funding of Medi-Cal (San Francisco Chronicle, 1/20).
Chamber Chair David Fleming said the proposal was "a work in progress" and that a task force would be created to examine its components (Los Angeles Times, 1/20).
A transcript and video of the governor's meeting with the Los Angeles Area Chamber of Commerce is available online.
Assembly Minority Leader Mike Villines (R-Clovis) is leading the Republican opposition against the employer-contribution mandate in the governor's health care proposal, the Sacramento Bee reports.
Republicans consider the contribution a tax, which would require two-thirds approval in the Legislature, allowing opponents to block its passage. However, Schwarzenegger and Democratic lawmakers say the contributions are fees, not taxes (Schultz, Sacramento Bee, 1/21).
The governor said the fees would be offset for employers by lower health care costs, "making it less expensive to do business" (Gledhill, San Francisco Chronicle, 1/22).
Assembly Speaker Fabian Nuñez (D-Los Angeles) said he plans to pass the plan with a simple-majority vote (Sacramento Bee, 1/21).
Jon Coupal, president of the Howard Jarvis Taxpayers Association, said his organization would consider filing a lawsuit if the plan would require only a majority vote (San Francisco Chronicle, 1/22).
However, Villines, referring to the contribution as a "jobs tax," said, "If the Democrats push something through, [Schwarzenegger] would reject it. I really believe that" (Sacramento Bee, 1/21).
Allan Zaremberg, president of the California Chamber of Commerce, declined to comment on whether his organization would seek a referendum on health care reform legislation that the Legislature could approve this year.
Voters in 2004 repealed an employer health care mandate before it could take effect (San Francisco Chronicle, 1/22).
Summaries of editorials addressing Schwarzenegger's health care reform plan appear below.
Contra Costa Times: "Regardless of what side of the tax-fee argument one supports, there is certain to be a legal battle over the payroll levy if there are no changes to the governor's proposal," a Contra Costa Times editorial states. "It would be a shame to delay progress on health care reform because of protracted and divisive litigation over the legal definition of a tax," according to the editorial. "[T]he governor and legislators," especially Republicans who oppose the employer-contribution mandate, "need to work together on some kind of compromise," the editorial concludes (Contra Costa Times, 1/21).
Los Angeles Times: California residents "should take a special interest" in a federal appeals court ruling against a Maryland law that would have required employers to contribute a percentage of payroll to health benefits, a Los Angeles Times editorial states. The court's overturning of the Maryland law "demonstrates how easy it is for a statewide experiment to run afoul of federal regulations, even if that experiment is about solving a problem" (Los Angeles Times, 1/20).
Summaries of opinion pieces addressing the proposal appear below.
- M. Gregg Bloche, Los Angeles Times: "The radical promise of the Schwarzenegger plan lies in its potential to move beyond the metaphor of medical care as a handout toward the bracing idea that health is both an individual and common duty," Bloche -- a law professor at Georgetown University, visiting professor of law at UCLA and senior fellow at the Brookings Institution -- writes in a Los Angeles Times opinion piece. "Reimagining health care as both personal duty and civic obligation ... might break the political paralysis that has allowed the number of insured Americans to approach 50 million," according to Bloche (Bloche, Los Angeles Times, 1/21).
- George Skelton, Los Angeles Times: Schwarzenegger's entire reform proposal would have difficulty passing because of "term limits, extremist lawmakers produced by gerrymandering and special interests ganging up on all sides," Skelton writes in his Los Angeles Times column "Capitol Journal." According to Skelton, legislators should focus on children's health coverage, writing that "kids' germs aren't conservative or liberal, documented or undocumented. They spread indiscriminately, regardless of immigration status or tax brackets." He concludes, "If nothing else, the politicians should protect every child" (Skelton, Los Angeles Times, 1/22).
- John Fund, Wall Street Journal: The governor's health care proposal "does almost nothing to reduce the burden" of 49 health insurance requirements in California, mandating coverage of services such as chiropractic and mental health care, Fund writes in a Journal opinion piece. Such mandates are "[f]ar more consequential" than "free-riders in emergency rooms," he writes. According to Fund, "Many health care analysts worry that Mr. Schwarzenegger's Rube Goldberg scheme of insurance mandates will create so many failures and frustrations that adoption of a single-payer government system will be inevitable" (Fund, Wall Street Journal, 1/22).