Health Care Reform a Priority for 2007

Gov. Arnold Schwarzenegger (R) is getting ready to inaugurate what he says will be “the year of health care” in California.

Over the next six weeks, the governor and a few hand-picked advisers will put the finishing touches on a long-awaited health care reform proposal.

His ideas — about five years in the making — might get most of the attention in Sacramento, but they won’t be the only proposals out there. At least two or three other major pieces of health care legislation will be introduced or re-introduced next year, and sources say others might be in the works.

Riding his one-sided election victory and perhaps looking at other political pastures, the governor certainly will command the health care spotlight early in the year. Hoping to have plans solidified before his State of the State address in early January 2007, Schwarzenegger has indicated he wants health care solutions to be a focal point of his second term in office.

Legislators, aides and capitol insiders use words like “legacy,” “lasting contribution” and “signature issue” to describe the governor’s current zeal for health care policy. Declaring 2007 “the year of health care” in California as the 2008 presidential race begins, Schwarzenegger, some say, hopes to become a sort of national poster boy for consensus, bipartisan government.

Successful, bipartisan solutions could help create a springboard to send the Republican governor beyond Sacramento. Aides say he hasn’t ruled out a run for the U.S. Senate against Democrat Barbara Boxer in 2010.

So plenty is riding on the governor’s proposals — his legacy, political future and maybe the health care of California’s 34 million residents, about one in five of whom (close to seven million) have no or inadequate health insurance. It is the growing ranks of the uninsured who will be the focus of the governor’s plan.

Whose Plan Will It Be?

As part of a major overhaul of his administration in the months preceding the election, Schwarzenegger hired four advisers — three Democrats, one Republican — to help hammer out his proposal. They are part of the governor’s retooled leadership regime. Roughly half the governor’s administration – more than 90 employees – left the payroll following the November 2005 special election when voters soundly rejected Schwarzenegger’s rebuilding plans.

The new health care advisers, none of whom are sharing their thoughts with the public right now, are:

  • Richard Figueroa, former legislative director for Insurance Commissioner John Garamendi and former aide to former Gov. Gray Davis (D).

  • John Ramey, former executive director of the Managed Risk Medical Insurance Board, deputy secretary and assistant secretary of the Health and Welfare Agency, and chief of staff for the Department of Health Services. Since 2000, Ramey, a Republican, has been principal and partner of Ramey, Macomber & Associates a Sacramento firm specializing in health care and health insurance contracts.

  • Herb Schultz, former deputy director of the state Department of Managed Health Care, most recently vice president of government programs at McKesson Health Solutions. Schultz also served as acting director of the California Employment Development Department and acting secretary and undersecretary for the Labor and Workforce Development Agency.

  • Daniel Zingale, chief of staff for first lady Maria Shriver and former director of the Department of Managed Health Care.
Who’s Going To Pay for It?

Two factors make this a particularly thorny question: The state budget is predicted to fall billions of dollars short next year, and Gov. Schwarzenegger has promised “no new taxes.”

The nonpartisan Legislative Analyst’s Office issued a forecast earlier this month predicting California would be more than $5 billion in the red for next year’s budget. There’s a surplus of about $3 billion that could reduce the red ink to about $2 billion, still a daunting figure when considering major plans to subsidize health care.

It’s a pretty safe bet some kind of public-private partnership — or several partnerships — will share the burden in the governor’s proposal. And that burden could be substantial. Providing insurance for all of the state’s uninsured could run as high as $20 billion a year, according to Duane Dauner, president of the California Hospital Association.

Schwarzenegger has said that government might not be able to manage that all at once but that covering half the uninsured was a reasonable goal.

Health Access, a statewide coalition of more than 200 consumer and community groups, estimates that coverage for three million people would cost about $6 billion.

What Will the Plan Look Like?

Although neither the governor nor his advisers have provided much in the way of hints, several possible strategies have been mentioned, ranging from retail giants selling health policies to a statewide plan requiring residents to maintain health insurance, similar to legislation requiring drivers to have liability coverage.

Some capitol observers say the governor and his crew are studying Home Depot’s strategy of selling customers health insurance using the company’s buying leverage to negotiate good rates for the public as well as for its own employees.

The governor and his advisers are also paying close attention to new laws passed last year in Massachusetts that require all citizens ages 18 and older to carry health insurance. Republican Gov. Mitt Romney got national recognition last year for his plan that provides government subsidies and other techniques to help make insurance affordable.

A national proposal introduced earlier this month by America’s Health Insurance Plans also is getting close scrutiny in Sacramento, some observers say. The national plan seeks to extend health insurance to all children within three years and to almost all adults within 10 years.

The insurance trade group’s plan hopes to extend health coverage by expanding eligibility for public programs, enabling all consumers to purchase health insurance with pretax dollars and providing financial assistance to help working families afford coverage.

Competition for the Governor

The governor’s plans will face competition next year. At least two pieces of health care reform legislation will be offered to lawmakers next year and perhaps more will be placed before voters through statewide initiatives.

Topping the list will be Sen. Sheila Kuehl’s (D-Los Angeles) single-payer plan that the Legislature passed this year and the governor vetoed. Kuehl plans to reintroduce her bill, which would replace private health insurance in California and would make all state residents eligible for coverage under a new state program that would be the sole payer of most health care services. The Senate and Assembly both passed the bill with room to spare but Schwarzenegger rejected it, calling the plan “socialized medicine.”

Also expected on the table next year is a statewide plan from the Service Employees International Union. SEIU supported Kuehl’s single-payer plan this year and hopes to offer something similar next year, sources said.

California Could Lead the Way

No matter what happens here next year, stakeholders predict California can lead the way for the rest of the country, which may finally be ready to grapple with a health care system that almost everyone now admits needs to be reformed.

The U.S. is the only industrialized country without universal health care, and one in six residents, or about 47 million people, have no health coverage. The World Health Organization ranks the U.S. health care system 37th in the world for quality and 55th for fairness.

“The health care conversation is relatively advanced in California, but, at the national level, they’re just beginning,” said Anthony Wright, executive director of Health Access. “I hope next year in California we’ll see the end of the debate rather than the beginning.”

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