by George Lauer
California HealthCare Foundation
January 29, 2007
What a difference a year makes.
Not too long ago, California had one big-picture proposal on the table to fix the state’s ailing health care system. There was a noticeable lack of discussion until Gov. Arnold Schwarzenegger [R] vetoed that plan, decreed 2007 “The Year of Health Care” and promised a plan of his own. Assembly and Senate leaders scurried to work up alternative plans and announced them a couple of months ago. The governor unveiled his much-anticipated proposals earlier this month. And now, President Bush has a plan.
We’ve gone from not much to look at or say to lots of both.
“No matter which proposals you might like or what you think will or won’t work, you have to be really glad that people are at last finally talking about health reform,” says Randolph Boyle, staff attorney with the National Health Law Program in Los Angeles.
“We’re way overdue.”
Gov. Schwarzenegger proposes a $12 billion health care reform package fueled by “contributions,” not taxes. Under his plan, all California residents would be required to have some kind of health insurance, similar to the stipulation now that all drivers must carry auto insurance. Medi-Cal and Healthy Families would be expanded to help provide coverage to low- and moderate-income residents. Individuals without insurance would face a reduction in state income tax refunds or have wages withheld.
In many ways, the governor’s plan mirrors those of Assembly leader Fabian Nunez (D-Los Angeles) and Senate President Pro Tem Don Perata (D-Oakland).
How President Bush’s national proposals might affect California’s plans is far less clear and will depend on which parts of whose proposals are adopted.
Long- vs. Short-term Strategies
One way to make sense of these competing proposals is to classify the components in each plan as long-term or short-term solutions. In one crucial context, four of the five measures now on the table can be construed as short-term solutions because they’re predicated on a system whose days might be numbered.
There is growing agreement that the current employer-provided health insurance system can’t last forever.
“I don’t think this system was meant to go on and on indefinitely, and it’s becoming pretty clear that it can’t,” Boyle says. “It’s already a couple decades past its prime.”
After World War II, hoping to stimulate the economy while guarding against profiteering, the government encouraged employers to offer fringe benefits to attract labor. Heath insurance was one of them. Over the past half century, however, health care has become so expensive that providing for it is no longer a fringe — it’s an expectation.
And it soon could become a mandate, although there is potential for legal challenges on that front. A federal appeals court ruled this month against a Maryland law requiring minimum employer health care contributions. That could create a significant roadblock for Schwarzenegger, Perata and NuĆĀ±ez.
Is a Single-Payer System the Answer?
As costs continue to rise — and there’s no reason to expect they won’t — employers, as well as individuals, are being priced out of the health insurance market, mandate or no mandate. The main alternative to such a scenario is a single-payer system, a notion already adopted in almost every other nation in the industrialized world.
“I still believe single-payer is the correct answer for the long term,” says Sen. Sheila Kuehl (D-Los Angeles), chair of the Senate Health Committee and author of SB 840, a single-payer proposal for California that essentially would shift responsibility for providing health care coverage off employers’ shoulders and onto the government’s. Her plan would leave the insurance industry out of the loop and give the government considerable clout in negotiating prices with all kinds of medical providers from pharmaceutical companies to hospitals.
Passed by the Legislature last year and summarily vetoed by Schwarzenegger, her bill has been reintroduced in the Senate this year. Not surprisingly, it once again faces fierce opposition from the insurance industry, drug makers and others who profit from market-driven health care.
“What I see happening on the short term is 840 continues independently on its track, hopefully passes both houses and is again put on the governor’s desk,” Kuehl says. “And at the same time, we see what we can do in this two-year session to alleviate some of the immediate problems and expand coverage where we can,” Kuehl says.
“I don’t think there will be support for individual mandates,” Kuehl predicts. “The governor’s proposal closely mirrors what they’re trying to do in Massachusetts and they’re having trouble there. Private industry health insurance is just too expensive to force everybody to buy it.”
Recent estimates in Massachusetts show family premiums may be twice what originally was envisioned when the plan was approved.
Several single-payer plans are in the works nationally – Sen. Ted Kennedy’s push to expand Medicare, the AmeriCare plan from Rep. Pete Stark, D-California, Physicians for a National Health Program. They face the same opposition – and occasional support – as Kuehl sees in California.
“We would support an extension of Medicare,” says David Lipschutz, attorney for California Health Advocates, a consumer group based in Los Angeles. “It’s the flagship social insurance program for the federal government and generally beloved by most of its enrollees. There have been suggestions of gradually expanding the system to eventually include everyone, and that makes sense to us.”
Although President Bush in his State of the Union speech broached the issue of rising health costs for the first time, there is general consensus that the country is years away from entertaining – let alone embracing — any kind of single-payer plan.
Many health care experts, politicians and pundits predict it will be states such as California that lead the way.
“I think, ultimately, we will come to an agreement as a nation that free-market health care is not a good idea,” says Boyle from the National Health Law Program, “but we’re still pretty far away from that day, unfortunately.
“Most of the rest of the world went to single-payer plans at the beginning of the 20th century,” Boyle says. “We’ll be about 100 years behind, but I’m confident we’ll get there.”
