Legislative Update: Health Care Reform Proposal Dominates Week’s News
After months of speculation and closed-door meetings with advisers, Gov. Arnold Schwarzenegger (R) on Monday unveiled his health care reform proposal. Under the governor's plan, Medi-Cal and Healthy Families would be expanded to help provide coverage to low- and moderate income state residents, and individuals who declined to carry insurance could face a reduction in state income tax refunds or have wages withheld. The $12 billion plan immediately drew debate over provisions that would require contributions from employers and medical providers, as well as its inclusion of undocumented immigrants.
Lawmakers, business leaders, hospitals and physicians are questioning whether the proposal is assessing a "tax" to raise funds or a "fee." The distinction is important because a "fee" would require a simple majority vote for Legislative approval, while a "tax" would require a two-thirds majority, a situation that would require Republican votes to pass. Administration officials say the mandatory contributions constitute fees because the funds will be reused to pay for health insurance coverage, not channeled to the state general fund.
Some uninsured workers argue that a requirement to purchase coverage would force them into poverty instead of alleviate the cost of coverage. Consumer groups demand cost controls and guarantees that coverage is "meaningful" before it becomes mandatory for individuals to purchase it.
Business leaders also expressed concern about the impact that the mandatory 4% payroll contributions would have on small businesses, especially restaurants that operate on low profit margins with a high turnover rate and large part-time workforce.
Republican lawmakers criticized the proposal's mandatory "fees" from businesses, physicians and hospitals, as well as coverage of undocumented immigrants. A poll released Wednesday found that the majority of California residents share the Republicans' opposition to health insurance for undocumented immigrants.
Schwarzenegger concluded his busy week Wednesday when he outlined a $103 billion general fund budget for fiscal year 2007-2008. The proposal did not include new funds for the health care reform plan.
This week's Legislative Update also includes legislation on:
- A proposed state tobacco tax increase; and
- Notification requirements for terminating emergency services at hospitals.