Schwarzenegger Critical of Parts of Democrats’ Health Plan
On Tuesday, Gov. Arnold Schwarzenegger's (R) administration called a revised health care reform proposal by Democratic legislative leaders a "positive sign" but criticized provisions setting employer contributions and calling for a tobacco tax increase, the Sacramento Bee reports (Rojas, Sacramento Bee, 11/7).
The proposal, released Tuesday by Assembly Speaker Fabian Núñez (D-Los Angeles), comes eight weeks into the special legislative session on health care reform and signals an effort by Democratic leaders to reach a compromise with Schwarzenegger on several sticking points, including an individual coverage mandate, employer contributions and government subsidies for health insurance (California Healthline, 11/6).
The Democrats' proposal would require all residents to obtain health insurance, with the exception of anyone who would have to spend more than 6.5% of household income on health care costs.
Kim Belshé, secretary of the Health and Human Services Agency, said the exemption could leave healthy individuals out of the insurance pool, making it difficult to require insurers to provide coverage regardless of pre-existing medical conditions.
The Democrats' plan proposes that employers pay 2% to 6.5% of payroll based on a sliding scale, compared with Schwarzenegger's plan to require employers to pay zero to 4% of payroll based on a similar sliding scale.
Belshé took issue with the Democrats' proposed employer contributions, saying the contribution from small businesses "clearly needs to be lower." She added that the plan "doesn't include any exemptions for the smaller businesses, which is very important."
The Democrats' proposal would raise California's tobacco tax from 87 cents per pack to $2.87 to finance the health insurance subsidies.
Daniel Zingale, a health care adviser to Schwarzenegger, said, "We still think ... the most viable source" of revenue for partially funding health care reform is the governor's plan to lease the state lottery to a private company.
A funding mechanism for a health care reform plan would be on the November 2008 ballot and require voter approval.
Allen Zaremberg, president of the California Chamber of Commerce, criticized the proposed tobacco tax hike for being funded "by a declining revenue stream."
The Chamber of Commerce also argued that both the governor's plan and Democrats' plan violate the federal Employee Retirement Income Security Act, which pre-empts state laws involving employee mandates for health care benefits.
Art Pulaski, head of the California Labor Federation and a lead opponent of Schwarzenegger's individual mandate, said his group will hold a series of meetings to review the Democrats' proposal before taking a formal position (Sacramento Bee, 11/7).
Assembly Minority Leader Mike Villines (R-Clovis) said the Democrats' plan is "going backwards," adding, "It's insanity to think it will work" (Brightwell, "ABC News 10" Web site, 11/6).
- Exempt deposits into health savings accounts from the state income tax;
- Provide tax credits to employers that begin offering health care coverage;
- Allow individuals to deduct health care costs from state taxes;
- Give individuals and businesses the option of purchasing insurance policies that do not include coverage of services that the state currently requires;
- Increase Medi-Cal reimbursement rates for physicians; and
- Allow California residents to shop for health insurance outside the state.
Belshé said that elements of the proposal, "such as tax credits to increase affordability and raising Medi-Cal reimbursement rates, are similar to what [Schwarzenegger] has proposed" (Robertson, Sacramento Business Journal, 11/6).
Summaries of editorials regarding the health care reform debate in California appear below.
- Sacramento Bee: The Democrats' proposed tobacco tax increase is "a more viable way" of partially financing health care reform than Schwarzenegger's plan to lease the lottery, a Bee editorial states. The governor "will now want to drill down the details, but he should feel encouraged the Democrats have come forward with a good-faith counterproposal" (Sacramento Bee, 11/7).
- San Diego Union-Tribune: "It is a shame that so many people struggle to get good health care in a state as affluent as California," a Union-Tribune editorial states. "Unfortunately, the debate in Sacramento over what to do about this problem has long since become a debacle, defined by a refusal to acknowledge both basic economics and clearly written federal law," ERISA, the editorial states (San Diego Union-Tribune, 11/7).
- San Jose Mercury News: The proposed tobacco tax increase "makes far more sense than privatizing the lottery," but relying "on a diminishing group of smokers to fund reform is not a good bet," a Mercury News editorial states. "A better solution would be to ask insurance companies, which are already realizing great profits, to shoulder at least a portion of that burden" (San Jose Mercury News, 11/7).
Several broadcast programs recently reported on the Democrats' revised proposal. Summaries appear below.
- Capital Public Radio's "KXJZ News": The segment includes comments from Núñez (Russ, "KXJZ News," Capital Public Radio, 11/7). A transcript and audio of the segment are available online.
- KPCC's "AirTalk": The segment includes a discussion with Los Angeles Times staff writer Evan Halper, Núñez and H.D. Palmer, deputy director of external affairs for Schwarzenegger, about the Democrats' plan and the governor's proposal for a 10% cut in the state budget (Mantle, "AirTalk," KPCC, 11/6). Audio of the segment is available online.
- KPCC's "KPCC News": The segment includes comments from Núñez and Senate President Pro Tempore Don Perata (D-Oakland) (Small, "KPCC News," KPCC, 11/6). A transcript and audio of the segment are available online.
- KPCC's "Patt Morrison": The segment includes a discussion with KPCC correspondent Julie Small about the Democrats' proposal (Morrison, "Patt Morrison," KPCC, 11/6). Audio of the segment is available online.
- KPBS' "KPBS News": The segment includes comments from Núñez (Russ, "KPBS News," KPBS, 11/6). A transcript and audio of the segment are available online.