By Jordan Rau
Los Angeles Times
January 29, 2008
Gov. Arnold Schwarzenegger’s audacious plan to arrange medical insurance for nearly all Californians — one watched as a potential model for the nation — was rejected Monday by the state Senate, obliterating the chance of anything but piecemeal healthcare changes from the Legislature this year.
The Senate Health Committee voted down the $14.9-billion proposal, which would have required people to hold private insurance and subsidized the premiums for those who could not afford them. The repudiation came from Republicans and Democrats, with only one of 11 senators backing the plan that Schwarzenegger and Assembly Speaker Fabian Nuñez (D-Los Angeles) spent much of 2007 putting together.
Lawmakers called the plan, which passed the Assembly last month, “fundamentally flawed” and “a fairy tale” as a visibly frustrated Nuñez, sitting in the committee room, muttered disagreement under his breath. Senators said the proposal, while laudable in its ambitions, might fall apart financially in a few years, leaving the state to cancel its new healthcare services or put taxpayers on the hook for billions of dollars more.
The defeat may be a poor omen for national efforts to overhaul the country’s healthcare system. The three leading Democratic presidential candidates — Hillary Clinton, Barack Obama and John Edwards — all have proposed similar programs aimed at expanding private insurance while allowing people who have coverage they like to keep it.
http://www.latimes.com/news/local/la-me-health29jan29,1,2516994,full.story
And…
Health plan faces fines of $1.33 billion
By Lisa Girion
Los Angeles Times
January 29, 2008
California regulators are expected to announce today that they are seeking as much as $1.33 billion in penalties from Cypress-based PacifiCare as a result of widespread problems stemming from its takeover two years ago by healthcare giant UnitedHealth Group Inc.
In an investigation prompted by widespread complaints, the state Department of Insurance uncovered 133,000 alleged violations of state laws and regulations regarding payments for medical care. Each violation carries a maximum penalty of $10,000 for a possible total of $1.33 billion.
Separately, the state Department of Managed Health Care alleged that 30% of the medical claims it reviewed were improperly denied. That agency is seeking an additional $3.5 million in fines.
“These were very serious violations,” said Cindy Ehnes, executive director of the Department of Managed Health Care. “The most fundamental promise of insurance is that they will pay when you are sick, and they will pay those physicians and hospitals in a fair manner.”
Insurance Commissioner Steve Poizner expressed frustration at efforts to get the company to make changes.
“After years of broken promises to California regulators, it became crystal clear that PacifiCare simply could not or would not fix the meltdown in its claims-paying process,” he said. “We’re going to put an end to that. If PacifiCare can’t understand the ABCs of basic claims payment, maybe it will understand the dollars and cents of regulatory action.”
http://www.latimes.com/business/la-fi-insure29jan29,0,3638983.story
Comment:
By Don McCanne, MD
There is no celebration in California. We are back to the status quo. Although those who call for compromising fundamental health policy principles say that the status quo is everyone’s second choice, it isn’t. It’s our last choice.
What on earth happened in California?
The California legislature passed SB 840, Sen. Sheila Kuehl’s single payer bill that would have ensured comprehensive, affordable health care for everyone. Gov. Schwarzenegger vetoed it simply because of his anti-government ideology. He then called for a post-partisan process that would achieve the goal of universal, affordable coverage, with shared responsibility for financing health care.
The model selected, of course, was to build on the current system, expanding public coverage, and mandating individuals (or their employers) to obtain private insurance coverage. Numerous studies have confirmed that this is by far the most expensive method of achieving comprehensive reform, and falls short on several important policy measures.
After years of relative inaction on reform, a new problem has been introduced. Health care has become so expensive that private insurers are no longer able to market reasonably comprehensive plans at premiums that are affordable for average-income individuals. As in Massachusetts, the negotiators of the reform proposal pretended that they could.
Fortunately, Senate President Pro Tem Don Perata recognized that the bill was structured on a wish-it-would-work financing proposal, and failed to pass the sniff test. He decided that we needed more information about the proposed financing. He asked for an independent analysis by the Legislative Analyst. The numbers didn’t work.
To move forward with this proposal would have resulted in financial hardships for average-income Californians who needed health care, and it would have resulted in chronic underfunding of the health care delivery system with inevitable impairment of access (“rationing” due to inadequate resources).
It has been well established that the least expensive and most effective and equitable method of comprehensive reform would be to adopt a single payer system. Yet, in the name of compromise, health reform negotiators continue to insist that reform must be built on a framework that keeps the private insurance industry in play. This is an industry that makes health care access unaffordable by shifting costs to patients, that deprives patients of their choices of health care providers, that dumps high-cost patients onto taxpayer-funded programs, that… (make your own list).
Since they are doing such a poor job of providing the services that we should expect from insurers, what do they provide that should cause us to keep them in play? Well, their primary product is administrative services. How well are they doing there? They not only provide a great excess of expensive, superfluous administrative services, they also place a tremendous, costly administrative burden on the providers of health care.
Some might say that the outrageous costs of this administrative burden might be worth it if they were providing high-quality administrative services. But as an example, look at the record of UnitedHealth/PacifiCare. The most stright-forward administrative function is claims processing. Yet, as Insurance Commissioner Steve Poizner says, “after years of broken promises to California regulators, it became crystal clear that PacifiCare simply could not or would not fix the meltdown in its claims-paying process.”
We need to hunt down the nut who keeps telling us that we can’t fix our health care system without including the private insurance industry. Whoever it is is feeding that same nonsense to the leading Democratic presidential candidates.
A positive note:
Yesterday, before the crucial vote in the Senate Health Committee, hundreds of medical students from throughout California descended on Sacramento for Lobby Day – to advocate for a single payer health care system. The day before, a training session was so well attended that a second auditorium with video transmission was required to accommodate the students.
My observation is that the future of U.S. health care is in very, very good hands.
http://www.csphr.org-a.googlepages.com/lobbyday#cosponsors
