Governor’s Health Care Plan Relies on Federal Funding

Gov. Arnold Schwarzenegger's (R) $12 billion health care reform proposal calls for $5.5 billion in expanded federal funds, including $3.7 billion in increased Medi-Cal funding, the Sacramento Bee reports. The remainder would increase funding for Healthy Families and reimbursement rates for both programs to physicians and hospitals (Benson, Sacramento Bee, 1/14).

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 declined to carry insurance could face a reduction in state income tax refunds or have wages withheld.

The $12 billion plan also would require contributions from employers, individuals, insurers and medical providers (California Healthline, 1/12).

Health and Human Services Agency Secretary Kim Belshé said CMS is required to award the state the requested funding.

According to Medicaid rules, the federal government must match state funds if the money is used for programs that meet federal requirements, the Bee reports.

Jeff Flick, regional administrator for CMS, said the agency has not reviewed the governor's proposal (Sacramento Bee, 1/14).

Debate Over Proposal

The Schwarzenegger administration and Democratic lawmakers are disputing assertions by Republicans that the required contributions from businesses, physicians and hospitals to help fund the governor's health care reform proposal are taxes, the Los Angeles Daily News reports.

Sabrina Lockhard, a spokesperson for Schwarzenegger, said state law maintains that a tax is for revenue purposes, while the "fees" outlined in the proposal are being reused to extend health care coverage (Sheppard/Zapler, Los Angeles Daily News, 1/14).

A "fee" would require a simple majority vote, while a "tax" would require a two-thirds vote for legislative approval.

Assembly Speaker Fabian Nuñez (D-Los Angeles) said that the plan is "absolutely not a tax" and that Republican lawmakers are going to be "the biggest obstacle toward anything getting done" in the legislative session (Yamamura, Sacramento Bee, 1/14).

Sen. Tom McClintock (R-Thousand Oaks) said the governor has "broken his central pledge made during the campaign not to raise taxes" (Chorneau, San Francisco Chronicle, 1/15).

Health Care Costs

Medical policy experts say Schwarzenegger's health care reform proposal does not address the problem of medical access and cost of treatment because of a high concentration of specialist physicians, the Silicon Valley/San Jose Business Journal reports.

David Gibson, former president of four health insurance companies and former CEO of a physician group practice, said that California has a high rate of specialist physicians, and as a result, ranks among the top three states for inpatient spending during the last two years of life for Medicare beneficiaries.

Gibson said that specialists are increasing spending because they favor high-cost, high-tech resources in intensive care units over community-based options such as hospices (Solovitch, Silicon Valley/San Jose Business Journal, 1/12).

Editorials

Summaries of editorials addressing Schwarzenegger's health care reform plan appear below.

Boston Globe: "California's huge number of uninsured brings home the fact that the problem transcends state lines," a Boston Globe editorial states. Expanding health coverage "ought to be the responsibility of the federal government," but "[p]ending a sudden case of courage" in Washington, D.C., "the states are forced to take the lead," the Globe states (Boston Globe, 1/14).
Des Moines Register: Gov. Schwarzenegger's proposal "raises the profile of health care as an issue that must be addressed," a Register editorial states, concluding, "For that, he deserves praise, not criticism" (Des Moines Register, 1/16).
Philadelphia Daily News: Like the Clinton administration, California Gov. Arnold Schwarzenegger (R) "unveiled a Rube Goldberg contraption that likely will be crippled by the same complexity that has resulted in the highest health care costs in the world but not the healthiest people," the Daily News writes in an editorial. According to the Daily News, a better approach would have been "expanding Medicare to cover everyone." The editorial continues, "A single-payer plan would not be tied to employment, not present enforcement issues and it would eliminate a lot of paperwork" (Philadelphia Daily News, 1/16).
Sacramento Bee: "We have no doubt that support for the governor's plan will swing once Californians begin to understand the larger issues," but that "may never happen ... if fear mongers continue to exploit the illegal immigration issue," a Bee editorial states. Unless Republican lawmakers are willing to introduce measures that ease "governmental burdens caused by illegal immigrants," they "really don't care" about Schwarzenegger's proposal and "just want to pander to groups that blame undocumented people for everything," according to the editorial (Sacramento Bee, 1/14).
San Francisco Chronicle: For Schwarzenegger "to sell Californians" on his universal health care plan, "he will have to confront" their "fears about how universal insurance could have a so-called 'magnet effect'" for undocumented immigrants, according to a Chronicle editorial. "He'll also have to keep the pressure on Congress to renew its immigration debate as quickly as possible," the editorial states. The editorial concludes that "if Californians don't feel that their concerns about the social and economic costs of illegal immigration are being addressed in some concrete way," it would be "a failure" for Schwarzenegger and "for all of our health" (San Francisco Chronicle, 1/15).
USA Today: "There's a lot to like in" Massachusetts' and California's plans to provide universal health care, but "how well the plans will work ... remains to be seen," USA Today writes in an editorial According to USA Today, "A national solution would be preferable, but having states serve as laboratories for experiments will let us see which ideas work and which ones should be abandoned." The editorial concludes, "Perhaps Washington will take notice and at long last act" (USA Today, 1/16).
Washington Post: California's "free-rider costs are real -- but hidden" -- and have "forced Mr. Schwarzenegger into choices that make more sense politically than substantively," according to a Post editorial. However, "Schwarzenegger deserves credit for his plan," the Post writes, adding that i f Schwarzenegger's plan is approved by the state Legislature, "it will juice the health reform movements that are gathering steam in state capitals across the country" (Washington Post, 1/15).

Opinion Pieces

Summaries of opinion pieces addressing the governor's health care plan appear below.

George Skelton, Los Angeles Times: Legislative approval of Schwarzenegger's health care plan is "at stake in this semantics squabble" over whether the proposed contributions from health care providers and businesses constitute "fees" or "taxes," Skelton writes in his "Capitol Journal" column in the Times. "[I]f universal health care is as important as the governor maintains -- and it is -- the state should make everybody pay by increasing sales and/or income taxes," Skelton writes (Skelton, Los Angeles Times, 1/15).
Jeremy Cantor, New York Times: "It's great if children grow up having access to affordable medical services, but it's better if they're going for a checkup instead of surgery," Cantor, a program manager at the Prevention Institute, writes in a New York Times letter to the editor. "The governor's plan includes recommendations about prevention ... that should be publicized and put into effect" (Cantor, New York Times, 1/14).
John Schlitt/Serena Clayton, New York Times: Schwarzenegger "also deserves commendation for his plan ... to expand health centers into 500 elementary schools," Schlitt -- executive director of the National Assembly on School-Based Health Care -- and Clayton -- executive director of the California School Health Centers Association -- write in a New York Times letter to the editor. "Gov. Schwarzenegger joins a growing list of state policy makers who are finding ways to finance school-based health centers that bring medical and mental health care services where students learn and grow" (Schlitt/Clayton, New York Times, 1/14).
Steve Wiegand, Sacramento Bee: The "inherent human trait of selfishness" was "embarrassingly apparent" in reaction to Gov. Schwarzenegger's health care proposal, columnist Wiegand writes in the Bee. He goes on to paraphrase reactions from health care providers, organized labor, businesses and other groups (Wiegand, Sacramento Bee, 1/13).
Don McCanne, USA Today: "The big winners in the Schwarzenegger and Massachusetts health plans are private health insurance firms," who will earn billions in "wasteful administrative fees that do not occur in government insurance programs such as Medicare," McCanne, a senior health policy fellow of Physicians for a National Health Program, writes in a USA Today opinion piece. According to McCanne, "inefficient, private-sector insurance bureaucracies have failed and need to be replaced with single-payer national health insurance" (McCanne, USA Today, 1/16).
Sally Pipes, USA Today: "Forcing people to buy health insurance will not solve the problem of the uninsured, make America healthier or decrease the amount of money we spend on health care," Pipes, president and CEO of the Pacific Research Institute writes in a USA Today opinion piece. Instead, mandates "will increase taxes, kill jobs and destroy private health care markets," according to Pipes (Pipes, USA Today, 1/16).
Maggie Gallagher, Washington Times: "Republicans who applaud themselves for trashing '90s-style HillaryCare need to think hard about what's ahead -- for the good of the country, and also in case they want a prayer of winning an election next time around," Gallagher, a syndicated columnist, writes in a Washington Times opinion piece. According to Gallagher, "Over the long haul, ... public support for government health care is going to grow on the grounds that the tortured system you don't know can't be worse and might be better than the torturer you do." Gallagher concludes, "If we want a better alternative, someone is going to have to do some hard thinking, fast" (Gallagher, Washington Times, 1/14).

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.