Governor’s Health Proposal Stirring Concern Over Costs

Almost one million of the two million uninsured California residents who would not be eligible for state subsidies would have difficulty affording coverage required by Gov. Arnold Schwarzenegger's (R) health care reform proposal, according to a health policy expert, the Los Angeles Times reports.

Richard Brown, director of the UCLA Center for Health Policy Research, told the Senate Health Committee Thursday that 917,000 residents would have difficulty affording coverage.

Under the governor's plan, individuals whose incomes exceed 250% of the federal poverty level would not be eligible for government subsidies but would nonetheless be required to obtain health insurance if it were not offered by their employer.

Those residents would be required to purchase, at minimum, a high-deductible catastrophic insurance plan, a coverage option that critics say is of limited use to older people and those who require routine medical care.

The Schwarzenegger administration says high-deductible plans would cost about $1,200 per person annually and would cover costs that exceed $5,000 annually. Furthermore, families could pay as much as $5,000 more in co-payments before the coverage takes effect (Rau, Los Angeles Times, 2/18).

The governor's health care proposal has divided business leaders and groups over a provision requiring employers to provide coverage or contribute at least 4% of payroll into a state fund, the Los Angeles Times reports.

Leaders of businesses that already provide coverage would like other employers to help control costs by contributing to a universal health insurance program. However, they also are concerned that the plan will not contain rising medical costs.

Other business groups say the proposal is expensive and unfairly taxes employers.

Mark Baldassare, president of the Public Policy Institute of California, said the governor is "going to have to spend a lot more time explaining to his allies in the business community exactly how [the plan] is going to help them" (Lifsher, Los Angeles Times, 2/20).

Schwarzenegger and lawmakers in the Legislature are focusing on increasing Medi-Cal reimbursement rates as the first step toward reducing health insurance costs and the amount of uninsured residents, the San Diego Union-Tribune reports. Medi-Cal is California's Medicaid program.

Many health care experts attribute a history of low Medi-Cal reimbursement rates to health care providers for weakening the state's health care system, depriving the state of billions of federal dollars, and contributing to the rising cost of health insurance and hospitals' financial problems.

California spends less on its Medi-Cal patients than any other state, according to the California HealthCare Foundation. Others estimate that the state ranks 49th in reimbursement rates to providers.

The governor's plan seeks $3.7 billion to increase reimbursement rates (Ainsworth, San Diego Union-Tribune, 2/19).

"Health care is a hugely more complex and difficult issue than handing out public works funds," Dan Walters writes in his Sacramento Bee column. "Instead of giving away money, Schwarzenegger and lawmakers, in effect, want to take it from somebody and give it to somebody else," Walters writes, adding, "That's a political minefield."

"It will take more than political camaraderie to solve the health care puzzle," he writes. "We're talking real money now. It will take a political miracle to come up with something that is politically feasible and workable," Walters concludes (Walters, Sacramento Bee, 2/19).

KPCC's "KPCC News" on Friday reported on Schwarzenegger's proposal. The segment includes comments from representatives of the Service Employees International Union, the California Chamber of Commerce and the California Medical Association (Small, "KPCC News," KPCC, 2/16). Audio of the segment is available online.

In addition, KQED's "Forum" on Monday in the first hour of the program included a discussion on the governor's plan (Krasny, "Forum," KQED, 2/19). Audio of the segment is available online.