California's employer mandate is a step forward,but not enough
San Francisco Chronicle
September 1, 2003
Health Insurance for All
SB2 an important step in solving the problems of the uninsured By John whitelaw, M.D., the immediate past president of the California Medical Association, and Art Pulaski, the executive treasurer of the California Labor Federation, AFL-CIO.
Nearly 7 million people in California lack health-care insurance. Most uninsured Californians work and pay taxes, but do not receive health-care coverage from their employers. In fact, 8 out of 10 uninsured Californians work or are the dependents of working, uninsured Californians.
A special committee in the California Legislature is reviewing historic legislation called “Health Care for Working Families.”
This legislation — SB2 — would significantly expand access to health care
by building on the national system of employer-based health coverage.
Employers would pay a user fee into a state health insurance purchasing pool. Employers who provide a basic level of coverage would get a credit against the fee. Beginning in 2005, companies with more than 200 employees would be required to provide health insurance for their employees and dependents. In 2006, companies with more than 20 employees would be required to provide coverage for their employees, but not their dependents.
Smaller companies will be exempt from this measure.By providing coverage to millions of uninsured Californians, SB2 would save lives, safeguard medical services and stabilize skyrocketing premiums.This historic legislation (authored by Senate President Pro Tem John Burton,D-San Francisco) is sponsored by the California Medical Association,the California Labor Federation, AFL-CIO and thousands of other community and health advocate groups.
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Comment: California’s SB2 is a prime example of why the dialogue on reform
should not be “either incremental or universal,” but rather should be “incremental and universal.”
Our goal is comprehensive and affordable care for absolutely everyone which
can be achieved only by enacting a universal system of social insurance. But
because many barriers exist to achieving that goal in the immediate future,
we need to support interim measures that improve access and coverage without introducing detrimental policies that might negatively impact our goals.
It is estimated that SB2 will provide coverage to about 1.1 million of the
4.5 million Californians who are uninsured at any given point in time.
(At least 6.2 million Californians are uninsured at some point within a year.)
Expanding coverage to over a million residents is a very worthy goal,and
should be supported by all of us.
But SB2 still leaves several million without coverage. SB2 is the most expensive model of reform, and will increase California’s global healthcare costs significantly. It leaves in place the highly flawed and fragmented system of funding health care with its egregious administrative waste,catering to the private health insurance industry. It perpetuates many of the inequities in both the funding of health care and in the allocation of our health care resources. It clearly is not a measure that we can pass and then walk away from, as if the job were done.
SB921, the single payer bill of Sen. Sheila Kuehl, has not been included in
the conference committee deliberations, but it is still very much an active
bill. As a two year bill, it is scheduled for further consideration in January, 2004. It does have an almost insurmountable hurdle. Any tax increase in California must have a two-thirds vote in both the Senate and Assembly. The single payer model shifts private spending into the public sector. A variation of the model has not been created that would avoid a tax increase (even though offset by a reduction in private spending). The conservatives, though a minority, have been able to block any legislation involving a tax increase.
Although SB921 cannot pass in its present form, SB2 was crafted to avoid any
tax increase. Though SB2 falls far short of our goals, it can pass.Because
it is an improvement, it should be vigorously supported.
That said, we must not allow dissemination of the misperception that SB2
will have solved our health care problems. We must continue the fight for
coverage of the millions left uninsured, for eliminating the inequities in
our system, and for ensuring that comprehensive health care will be affordable for everyone.
We need to pass SB2. But then, instead of relaxing our efforts, we need to
become even more diligent in educating the public on the benefits of a single payer system of social insurance. California advocates need to send a loud and clear message on Sen. Kuehl’s SB921, the single payer bill.
Message: 2
From: “Don McCanne”
To:
Date: Tue, 2 Sep 2003 13:36:33 -0700
Subject: qotd: Understanding consumer-directed health care
California HealthCare Foundation
8/26/03
Understanding Consumer-directed Health Care in California
By Jon Gabel and Thomas Rice
Despite a shared interest among insurers and employers in exploring the potential of consumer-directed health plans, such coverage remains a rarity
in California-a state that typically leads the nation in innovative health
care models.
The report,Understanding Consumer-directed Health Care in California,examines consumer-directed health plans, which link consumers’ health coverage choices to the financial consequences of those choices. If,for example, consumers choose a health plan that results in greater overall expenditures, they will have to pay more in premiums. This report explains how the products work, identifies the industry players behind them, and discusses the factors likely to influence their growth.
The report focuses on three types of consumer-directed plans including:
* Health reimbursement arrangements (HRAs), whereby an employer establishes an individual health reimbursement arrangement for a specified dollar amount for each enrolled employee, generally in conjunction with a high deductible insurance product.
- Customized plans, whereby employers make a fixed contribution toward the
employee’s premium, and the employee then chooses among an array of products
with different prices that reflect a wide-range of benefit designs and provider networks.
- “Design your own” products, so far non-existent in California, let employees choose their own set of providers and benefit features-essentially designing their own provider network and specifying the services covered-with the employee’s premium contribution dependent on the choices made.
http://www.chcf.org/topics/view.cfm?itemid=21485
For the full report:
http://www.chcf.org/documents/insurance/ConsumerDirectedHealthCare.pdf
Comment: Since consumer-directed health care is being touted by some as the
next major trend in innovative reform efforts, activists should become informed on these proposals and their potential impact. The report by Gabel and Rice provides an excellent, straightforward explanation, along with a description of their initial impact in California.
Although purists in the health policy academic community might suggest that
we wait to observe the full impact of these innovations before we pass judgment on them, a few comments can be made in advance.
“Health reimbursement arrangements” (HRAs) are the insurance industry’s answer to medical savings accounts (MSAs). The accounts are funded by the employer. The accounts require administrative services since they can be used only for medical expenses, and they are not portable from employer to employer. They are combined with high deductible plans, usually PPOs.
Adverse selection is a problem if the employer offers any other options,resulting in excessive costs for plans that concentrate individuals with greater health care needs. Of concern is that the individual is exposed to 100% of the costs between the amount in the account and the deductible of the catastrophic coverage. Negative outcomes inevitably will result from failure to obtain timely care because of financial disincentives once the HRA account is depleted.
“Customized packages” are defined contribution programs in which the individual must pay more to obtain more comprehensive coverage of benefits and/or a greater selection of providers. Many healthy individuals will select lower cost coverage which may well prove to be inadequate if significant health care needs later develop. This defeats the purpose of insurance.
“Design-your-own” products do not exist in California. It is unlikely that they will ever be a significant player because of the difficulty of selecting and pricing almost unlimited variations in coverage.
Consumer-directed programs are designed to reduce health care costs for employers by shifting costs to employees. The health policy literature confirms that this can only result in reduced access to health care because of lack of affordability. Reduced access in turn results in impaired health outcomes. Consumer-directed programs are bad health policy. Why do we keep avoiding the inevitable conclusion that we need a comprehensive,universal program of social insurance?
(Thomas Rice discusses the issue of consumer choice in his chapter,”Should
Consumer Choice Be Encouraged in Health Care,” from the book, “The Social
Economics of Health Care,” edited by John B. Davis. It is well worth reading. http://www.semcoop.com/detail/0415251621)