Some steps, no leaps on healthcare

By Jordan Rau

Sept. 4, 2008 12 AM PT

Times Staff Writer

SACRAMENTO —

California lawmakers acted to curb some of the most extreme practices of the state’s healthcare industry this session, even as they failed to fix some of its most widespread problems, such as high costs and uneven quality.

The Legislature’s two-year session resulted in incremental tinkering with California’s healthcare system instead of the wholesale restructuring that Gov. Arnold Schwarzenegger dedicated himself to shortly after his 2006 reelection.

After the Senate rejected the governor’s $14.9-billion plan in January, healthcare advocates hoped that piecemeal improvements that didn’t tax the state’s treasury could be enacted. But aggressive lobbying by insurers and doctors and internal feuds among Democrats killed most of the proposals in the final weeks of the session, which ended Sunday without a budget in place.

“We’re going to need to make healthcare a big priority next year, because we obviously didn’t come close to completing the work,” said Senate President Pro Tem-elect Darrell Steinberg (D-Sacramento).

The Legislature’s major healthcare accomplishments involved several high-profile, though relatively uncommon, practices that afflict consumers and patients. Lawmakers agreed to stop insurers from retroactively canceling policies of sick customers except in cases in which the companies could prove their customers intentionally misled them when first applying for coverage.

Legislators decided to clamp down on hospitals that bill patients above what their insurance covers for emergency room and follow-up care. The practice, called balance billing, leaves consumers making up the difference when there are payment disputes among hospitals, doctors and insurers.

The Legislature also voted to create a new office to protect patient privacy in response to breaches at UCLA Medical Center, where more than 120 employees inappropriately viewed the medical records of prominent patients including actress Farrah Fawcett, singer Britney Spears and California First Lady Maria Shriver. Repeated privacy breaches at hospitals, nursing homes and doctors’ offices could lead to fines as high as $250,000.

Legislators agreed to order hospitals to be much more vigilant about infectious diseases that can spread from patient to patient.

Hospitals would have to reveal their rates of antibiotic-resistant infections, which are an increasing health threat. One of the most virulent strains, methicillin-resistant staphylococcus aureus, or MRSA, sickens or kills thousands of people a year.

Legislators also voted to require insurers to spend at least 85% of the premiums they collect on medical care rather than overhead and profits. If signed by Schwarzenegger, that measure could turn out to be the nation’s most stringent, although there are doubts that it will lead to lower premiums. In addition, lawmakers decided that insurers must pay for maternity care, cleft palate treatment and the purchase of medical equipment such as wheelchairs.

All of the measures await action by the governor, who has until Sept. 30 to sign or veto bills from this session.

But the most ambitious ideas for helping consumers obtain lower-priced, safe and effective medical treatments did not make it out of the Capitol. Many of those proposals had been lifted out of the comprehensive plan hammered out in December between Schwarzenegger and Assembly Democrats. Bills containing these revived ideas foundered in the Senate after protests from hospitals and the California Medical Assn., which represents doctors.

One of the measures would have given the state new powers to collect information on the prices and success rates of medical procedures performed by California’s physicians and hospitals. Lobbyists persuaded senators to exempt doctors from the bill and to insert language recognizing the “tremendous burden” that reporting such information to the government would place on healthcare providers.

The bill’s backers, which included business groups, unions and consumer advocates, were so upset by the changes that they ended up opposing the amended measure, said Beth Capell, a lobbyist for the Service Employees International Union, which represents many healthcare workers. The measure died without coming to a final vote.

Assemblywoman Sally Lieber (D-Mountain View), the author of the bill, AB 2967, said the changes “would make a dysfunctional system even worse.”

The physicians’ lobby also got doctors exempted from another measure aimed at protecting patients from being charged for medical mistakes and injuries they received while in the hospital. Those errors, often referred to as “never events” because many safety experts say they should never happen, include operations on the wrong patient or body part and surgical implements left in people’s bodies.

The narrowed bill, AB 2146, died in a Senate committee after the University of California complained that the payment ban could cost its teaching hospitals $10 million to $45 million a year.

Another proposal that had been plucked from the governor’s plan, only to die in the Senate, was designed to help consumers who buy medical coverage directly rather than through their employers. Insurers complained that the measure, which would have made it easier to compare competing policies, would have driven up the costs of the cheapest insurance products, because it would have banned health plans that only covered a limited array of medical services, such as those provided by hospitals.

Two days before the session’s end, the bill, SB 1522, failed on the Assembly floor after a critical number of Los Angeles-area Democrats, including Speaker Emeritus Fabian Nunez, withheld their votes. Nunez told a Times reporter at the time that the measure was “unworkable.” He later said that he was “committed to voting for the bill and getting it out” but that Senate President Pro Tem Don Perata (D-Oakland) adjourned on Sunday before the Assembly could get enough supporters to pass the measure.

Nunez’s actions, however, were widely interpreted as payback for the Senate’s rejection of the comprehensive healthcare plan he had devised with Schwarzenegger. He disputed that: “It was just unfortunate the Senate shut down early,” Nunez said.

A Public Policy Institute of California poll released last week, just as the session was wrapping up, found that 54% of likely California voters were willing to pay more either through higher premiums or taxes to increase the number of Americans with medical coverage.

The same percentage favored a government-run healthcare system, while 39% preferred the current system.

The Legislature passed a bill aimed at setting up a Medicare-like system for all Californians, but Schwarzenegger has vowed to veto it as he did two years ago.

Before they adjourned their session, legislators made sure to take care of their own health: They amended a bill concerning the state’s employee retirement system to give retired legislators with at least six years’ experience the option to buy vision insurance through the state.

jordan.rau@latimes.com.

Times staff writer Nancy Vogel contributed to this report.

For more information about these healthcare bills, follow the embedded links on the online version of this article at www.latimes.com.

Begin text of infobox

Capitol score card

Healthcare bills passed or rejected by the Legislature would:

Passed

* Limit insurance profits and overhead.

* Crack down on infectious diseases in hospitals.

* Increase fines for medical privacy violations.

* Require insurers to cover maternity care and medical equipment.

* Bar insurers from canceling policies of sick patients.