Political status of insurance mandates in California
Top Democrats, governor tout health care proposals
By Aurelio Rojas
The Sacramento Bee
June 22, 2007
Setting the stage for negotiations to begin in earnest, Democratic legislative leaders announced Thursday they have combined their proposals to expand health care in California.
Senate President Pro Tem Don Perata, D-Oakland, and Assembly Speaker Fabian Núñez, D-Los Angeles, previously agreed to require employers to spend 7.5 percent of payroll costs on health care, but differences remained.
In the biggest compromise, Perata agreed with Núñez to reject Republican Gov. Arnold Schwarzenegger’s proposal that everyone in the state be required to obtain insurance.
At an earlier news conference at the home of a small-business owner in Sacramento, where he touted his health care plan, Schwarzenegger held firm that employees be required to contribute.
“The only way that health care reform is going to work is if you have mandatory health care insurance,” said the governor.
In the coming weeks, the debate will focus on who would pay for health care expansion — and how much.
The Democrats and Schwarzenegger agree on requiring employers to help foot the bill. They also support creating a state-run insurance pool, mandating that insurance companies cover anyone who applies, and providing subsidies to the poor.
In agreeing to merge their plans, Perata and Núñez made some important decisions.
The state-run pool for high-risk individuals would be funded by an unspecified assessment on health plans under their proposal.
http://www.sacbee.com/111/story/235862.html
And…
Governor’s plea to insurers
By Kevin Yamamura
The Sacramento Bee
June 23, 2007
Gov. Arnold Schwarzenegger asked the nation’s health insurers Friday to provide coverage to all people, regardless of condition, and to devote more revenue to health care than administrative costs.
The Republican governor spoke at the America’s Health Insurance Plans Institute conference in Las Vegas, selling his health plan to cover 6.5 million uninsured Californians as a potential model for the rest of the nation.
Schwarzenegger received the biggest applause Friday when he declared that backers of single-payer universal health care are “absolutely wrong.”
“We want everyone to have access to coverage,” he said. “No one should be turned away because of age or because of some medical history. And if people cannot afford their insurance, of course government should be taking care of them and help them to get insurance. But if they can afford it, then you should sell it to them.”
The governor listed six insurers in California that back the idea of guaranteed coverage for individuals as long as it comes with a statewide mandate that everyone have health insurance.
But he did not name the state’s largest health insurer, Blue Cross of California, which covers more than 8 million state residents.
The company does not support a requirement to cover every individual regardless of condition. Instead, Blue Cross spokesman Nick Garcia said the state should expand its coverage of individuals through its high-risk pool. He warned that premiums would rise if California imposes a guaranteed coverage requirement on insurers.
http://www.sacbee.com/111/story/237564.html
Comment:
By Don McCanne, MD
Private health plans are obsolete. Even when insurers are successful in selling their plans to fairly healthy populations (employer-sponsored plans and medically-underwritten individual plans), health costs are now so high that they are unable to create a reasonably comprehensive insurance product that has premiums that are affordable for average- and low-income individuals, the majority of the population. Employer sponsorship has kept the plans alive, but that source is becoming evermore strained.
The California Democratic leadership, Speaker Nunez and President Pro Tem Perata, introduced similar bills, with one very important difference. Though they both included an employer mandate, Perata’s bill also included an individual mandate. When it was clear that you cannot require individuals to purchase a plan that they cannot afford, they agreed to drop the individual mandate. But that would leave a few million Californians without coverage.
In an effort to make private plans more affordable, in order to encourage voluntary purchase of the plans, they agreed to move high-cost patients into a state-run high-risk pool. But they would fund that with assessments on private plans, which would necessitate much higher premiums, especially in those plans which have risk pools limited to the very healthy, such as Blue Cross’ Tonik plans. Segregating and then indirectly recombining risk pools does nothing to make private plan premiums more affordable.
Ironically, it is Republican Governor Schwarzenegger who is insisting that everyone be covered. He believes that not only is it the right thing to do, but he also acknowledges that insurance doesn’t work for those with health care needs unless they are pooled together with the many who are healthy. He also understands that the government must be involved in obtaining insurance for those who cannot afford it. But he does not want any net increases in taxes over the current level of funding of public programs.
Gov. Schwarzenegger also understands that his proposal for an individual mandate breaks down if the insurance industry is unable to produce effective insurance products with premiums that are affordable for average-income individuals. Supporting policy from his wish-it-were-possible list, he appeared before a conference of America’s Health Insurance Plans to issue a plea for them to produce the mythical affordable plan for the majority of Californians.
Health care costs are now too high for average-income individuals to pay premiums that are set by the collective health care costs of the pool, plus added administrative costs, divided by the total number of participants in the pool, even when the pool has selected a relatively healthy population such as the workforce and their families. The private insurance model is obsolete.
It is not that we don’t have the money to pay for the care. We are already spending enough to fund comprehensive care for everyone. But we are stumbling over ourselves in trying to make private plans the funding vehicle when they no longer work. What we need is an equitable method of funding the health care pool. That would be a simple task if we would agree to establish a single universal pool and fund it through equitable, progressive taxes.
Keeping the obsolete model of private health plans in play merely because of a bizarre adherence to concepts of political expediency is not sound policy. Yet we continue to allow bad politics to trump good policy. Why?