6-22-07 Sorting Out the Action on the Health Care Frong

Volume 20 For Publication Date: June 22, 2007 No. 14

Sorting Out the Action on the Health Care Front

This year, there are many discussions, studies, and proposals addressing health care policy for the state, and Capital watchers agree that something significant in the area of health care should be expected from this Legislative session. Following is a summary of the major legislative proposals that are still moving through the process:

· AB 1 (Laird, D-Santa Cruz): This bill would provide universal health access to all children by expanding the Healthy Families and Medi-Cal programs, at an estimated cost of $75 million in 2007-08, increasing to more than $300 million in 2009-10 and beyond. About 50% of the increased cost is estimated to be the responsibility of the state’s General Fund, and the rest is expected to be covered by increased federal funds. This bill has moved to the Senate for consideration.

· AB 8 (Núñez, D-Los Angeles): This bill would create a statewide pool through which employers can purchase health benefits for employees. Employers would be required, effective January 1, 2009, to spend at least 7.5% of eligible wages on health care expenditures, or contribute this amount to the pool in order to cover employees. Coverage would also expand through the Healthy Families and Medi-Cal programs, and imposes new requirements for health plan carriers. This bill carries an estimated annual savings to the state of $380 million, due mainly to the shift of working individuals from the publicly supported programs, but the administrative cost of the new program has not yet been determined. This bill has moved to the Senate for consideration.

· SB 32 (Steinberg, D-Sacramento): This bill is similar to AB 1 (above) and has moved to the Assembly for consideration.

· SB 48 (Perata, D-Oakland): This bill is similar to AB 8 (above), but would be effective two years later—January 1, 2011. This bill has been moved to the Assembly.

· SB 840 (Kuehl, D-Santa Monica): This bill would create a single-payer system of health care in California, which would negotiate for or set fees and process claims for health care services provided through the system. If this bill sounds familiar, it is substantially the same bill of the same number that was approved by the Legislature but vetoed by the Governor last year. The bill, which does not specify a funding source to support the proposed system, has moved to the Assembly. This bill is linked to funding that would be provided through SB 1014 (Kuehl), discussed below, which has been held in the Senate and is now a two-year bill.

· SB 1014 (Kuehl,): This bill would provide the financing for SB 840 (above) by imposing a 3.78% payroll tax on employees and an 8.17% payroll tax on employers for specified wages. This bill did not make it out of the Senate by the constitutional deadline, so it is a two-year bill—in addition it would require a two-thirds vote of both houses since it imposes an additional tax.

The Governor’s health care initiative, as announced in January, is not in bill form. However, his proposal contained similar provisions to those of AB 8 and SB 48, but proposed that the funding source be primarily a tax on doctors, hospitals, and employers.

The high stakes associated with health care reform are playing out in newspaper and television ads. Public relations firms are running multi-million dollar campaigns for those who wish to maintain the status quo, as well as for those pushing for expanded coverage. Reportedly Blue Cross of California is spending $2 million to warn about the dangers of overhauling the system. On the other side, a coalition called Together for Health Care is spending a similar amount on ads urging the Legislature and Governor to fix the broken health care system. Members of the coalition include the California Medical Association, Health Net, the California Teachers Association, Kaiser Permanente, and Service Employees International Union.

Even Hollywood is weighing in. Director Michael Moore was in Sacramento the week of June 11, 2007, promoting his film about problems with the health care system with a special screening of his film, “SiCKO.”

Within the Legislature itself, the Assembly Republican Caucus has taken the unusual step of designing an entire website dedicated to health care reform, primarily laying out the down sides of proposed reforms. So far the reform bills are moving forward without a single Republican vote. Republicans would prefer to see health care coverage expanded by relying on market forces and incremental change.

According to news articles, Democratic leaders say they will negotiate with stakeholders in hopes of reaching a deal by the end of this year’s session.

—Sheila Vickers and Terry Anderson