By Amy Yannello
Sacramento News and Review
March 4, 2010
For more than 7 million working Californians who currently don’t have health insurance, Congress and President Barack Obama’s attempt to reform health care has been an exercise in frustration. The public option was almost immediately taken off the table, despite the fact that most independent experts agree reform won’t work without it, and after a year of negotiations, no bill is in sight. If the politicians in Washington, D.C., don’t get their act together soon, California just might beat the feds to the punch with a single-payer system of its own.
Senate Bill 810 (Mark Leno, D-San Francisco) would establish the “California Healthcare System”—a single-payer health-care system open to all residents. Currently in the Assembly, S.B. 810 is the third incarnation of a bill previously carried—and passed—by former state Sen. Sheila Kuehl (D-Santa Monica). Both bills, Senate Bill 921 and Senate Bill 840, were passed by the Legislature and vetoed by Republican Gov. Arnold Schwarzenegger.
Leno doesn’t expect the bill to pass this year, but said it lays the groundwork for two things: first, possible approval of the bill should a governor friendly to the concept be elected this November; and, in lieu of that, placing the bill on the ballot as an initiative and letting the people decide.
“We’ll either wait until we get a vote from a different governor—a Democrat—that believes in what we’re trying to do,” Leno said, “in which case the health insurers will challenge us at the ballot box. Or we won’t get a different vote, and we’ll take it to the voters ourselves. Either way, the voters will get their say.”
Leno and other health-care watchers say the initiative could land on the ballot as soon as 2012 and no later than 2014.
“It’s not socialized medicine,” Leno said. “It is a public/private partnership—publicly funded, privately managed. Your doctor does not change, your clinic, your hospital does not change. What changes is who pays, and rather than waste a third of our health-care dollars on administrative waste—current system—with single-payer, as with Medicare, we will have a 5 percent administrative cost.”
As with all government programs, taxpayers will be on the hook for the cost. But Leno and other experts claim that by pooling all the money together, including the federal dollars the state receives for public health-care programs such as Medicare, Medi-Cal and the Healthy Families Program, most individuals, families and employers will pay less than private insurance plans, which will be supplanted by the public system.
“That’s where the word tax takes on a negative connotation, and we need to educate people,” Leno said. “It’s important for people to know that this replaces the current premiums, co-pays and deductibles that they now pay to insurance companies.”
The fee structure was set out in 2005-06, when the bill was originally introduced. Leno maintains that voters would have to approve a premium structure based on true health-care costs once the measure is approved. The bill mandates that premiums must save the “average” resident and employer money.
If it should pass, the California Healthcare System would levy a tax on all working Californians, say, 4 percent, the amount agreed upon in the 2006 bill. This tax, combined with all public moneys currently spent on health care—including Medicare, Medi-Cal and Healthy Families—would be combined to form the funding mechanism for the CHS.
The bill places these public entities under one administrative umbrella. As the single payer, CHS will negotiate with providers to set fees for health-care services and reimburse claims for those services.
Should S.B. 810 pass, private health insurers, like Anthem Blue Cross, would be prohibited from practicing in California, except to do so for coverage of benefits not covered by the CHS—in other words, under very limited circumstances. The CHS will be administered by the California Healthcare Agency under the control of a health-care commissioner appointed by the governor and confirmed by the Senate.
Additionally, S.B. 810 simplifies the eligibility process for Medi-Cal and raises the income threshold to double the federal poverty index. An individual earning $21,000 or less annually, or a family of four earning $44,000 or less annually, would qualify for no-cost or low-cost medical care under Medi-Cal.
No co-pays or deductibles would be charged until the third year of the program’s operation, and then only for seeing a specialist without a referral from a primary care physician. Co-pays and deductibles would not exceed $250 annually per individual and $500 annually per family, except for those on Medi-Cal, who will not be subject to the co-pays or deductibles.
No co-pays or deductibles would be charged for preventive care received from a primary care physician.
Supporters of S.B. 810 out number opponents 3-1, and include the California Nurses Association, League of Women Voters, assorted clergy, labor unions, teachers and senior citizens.
“Why are the nurses supporting this?” asked Geri Jenkins, RN and co-president of the California Nurses Association. “Because we have 7 million uninsured in California and millions more who are underinsured, and they come to us sicker than they need to be because they didn’t have access to preventive care. So we see the pain and suffering that needn’t be there.”
Jenkins also contends that small-business owners are paying too much under the current system and that Leno’s plan would curtail spending substantially.
“Right now, employers are spending 14 percent of payroll to cover their employees. … This would cut that by half!” she said. “So it’s business-friendly. It’s an economic stimulus for the state to do something like this. We can’t compete with countries that have single-payer systems, because it costs us so much to provide health care, so this would give us an economic edge.”
Jenkins added that with health-insurance corporations like Anthem Blue Cross announcing in late February that it was raising its rates by 39 percent for all residents who sought to purchase insurance on the open market, California will cease to be a viable economy if it can’t rein in health-care costs.
“It’s the moral and economic thing to do,” Jenkins said. “We’re doing something fundamentally wrong here, the way things are.”
Anthem Blue Cross, one of the insurance companies signed on in opposition to the bill, did not return repeated calls for comment for this story.
The World Health Organization ranks the United States 37th among nations in quality of care, access to health care, health-care outcomes, life-expectancy rates and infant mortality rates—“and we pay twice per capita for this failed system,” Leno noted.
Check out the statistics: In 1960, the United States spent 5 percent of its gross domestic product on health-care costs. By 2000, health-care costs jumped to 13 percent of GDP, and in 2010, it will spend 17.3 percent. Projections for 2015 show the costs going up to 20 percent, and to 25 percent in 2025.
“This will consume us,” Leno said. “And the president is right—we will not restore our economic position on the world stage until we reform health care. Small business should support this because they can’t keep up with the ever-escalating cost, and we can’t compete in a global market with this system.”
At least two 2010 Republican candidates for governor—Steve Poizner and Meg Whitman—don’t appear to share Leno’s concern with the private system. Health care appears nowhere on either of their Web sites, not under
Poizner’s “Solutions for California” or Whitman’s “A New California” drop-down menus.
Poizner told SN&R he was “strongly against” any universal health-care plan and would, if elected, focus on four cost-containment measures. He believes “we need to accelerate the deployment of privacy-protected electronic medical records.” He would also support allowing health-insurance companies to offer catastrophic health plans, “rather than prepaid health care.”
“A big portion of the people who don’t have insurance right now could afford insurance if we would got rid of these mandates and just allow the health-insurance product to cover catastrophic events that, if they occur, would cause huge financial damage to people. If you had [that] coverage, then more people would be protected.”
Third, Poizner said he would greatly expand the fee-for-service “doc-in-the-box” clinics in Target and Wal-Mart stores “and other places where they actually post their prices and they provide a lot of the routine care that some people now go to the emergency rooms for.”
The final measure in Poizner’s medicine bag is cracking down on health-insurance fraud. As the current state insurance commissioner, Poizner claims he has 300 police officers in his department’s fraud unit who have uncovered “millions in insurance scams that all add to the current price of health insurance.”
Whitman’s campaign failed to return repeated phone calls for this story.
Meanwhile, state Attorney General Jerry Brown, who announced his bid for the Democratic gubernatorial nomination as this was going to press, makes it a point to highlight his health-care accomplishments in office at www.jerrybrown.org, under the heading “Fighting For You.”
“As Attorney General, Brown has sued medical laboratories for massive overcharges, stopped rip-offs in the Medi-Cal Program, cracked down on unlawful abuse of prescription drugs, fought misleading ad campaigns by major drug companies and arrested nursing home operators for forcibly drugging elderly patients,” the section reads.
As attorney general, he’s ordered an investigation into possible illegal practices by some insurers.
“We have been looking at these companies for a number of months and are very concerned that some of them are unjustly raising premiums and denying payment of legitimate claims,” Brown said. “Not only are the rate increases devastating to Californians strapped by the economy, but in some cases, they are possibly illegal. Our best attorneys are going to get to the bottom of this, and where we find violations of California’s unfair business laws, we intend to stop them.”
Brown subpoenaed records from the states seven largest insurers, Aetna, Anthem Blue Cross, Cigna, Health Net, Blue Shield of California, Kaiser Permanente and PacifiCare. The subpoenas cover pay-for-service health plans, which reimburse doctors and hospitals for services performed, unlike the HMO approach. The same seven companies were served subpoenas last month regarding their HMOs.
Brown said the insurance companies have 30 days to hand over their financial and other records. The investigation began in September and was prompted by reports that California’s five largest health-insurance providers were denying claims at rates of up to 39.6 percent.
Meanwhile, business owners appear to be taking a cautious approach to the Leno’s bill.
Daniel Conway, spokesman for the California Restaurant Association and its 23,000 members and 80,000 establishments, said his organization’s been “very focused” on what’s going on at the national level, “trying to find a workable solution.”
“Our stand right now is, they say there’s going to be a $46 billion hole the first year [in the state’s program] and a 12 percent tax imposed on employers and employees. … Who’s going to pay for those costs?” Conway said. “That’s a tough nut to crack.”
“I’m optimistic that we can get some solution at the federal level before we have to go to the voters here,” he added. “I think President Obama has put a lot of energy into this.”
But Leno and others dispute Conway’s figures, saying that the assumption is just a “spin answer” and that “no one can tell you for sure, right now, what premium schedule would be imposed.”
The nonpartisan Legislative Analyst’s Office, in its analysis of both Leno’s bill and of Kuehl’s previous two bills, seems to be saying both camps are correct. First, had S.B. 840 gone into effect and the CHS been enacted for 2010-11, the LAO estimated there would indeed have been a gap in funding of $42 billion. At the same time, the true cost of the initiative is “unknown” and could run into the “hundreds to millions” of dollars, depending on the ongoing role of the health-care commission and CHS.
What’s not in doubt is the dismal.
Whether S.B. 810 can cure California’s ills remains to be seen. What is certain, all agree, is that our health-care system is broken. For more than 7 million uninsured residents, the solution can’t come soon enough.