A second, third and fourth opinion on healthcare

IF ATTENTION IS the precursor to action, something might finally be done in Sacramento about the dismal state of healthcare insurance in California.

Four healthcare proposals are now before the Legislature, including one crafted by Gov. Arnold Schwarzenegger, which will be spotlighted in his State of the State address tonight.

Unfortunately, that plan and two others — state Senate President Pro Tem Don Perata’s SB 48 and Assembly Speaker Fabian Nuñez’s AB 13 — are short-term solutions that have the potential to expand coverage but at the end of the day can’t be relied on to achieve what 80% of Californians say they want: a government guarantee of access to affordable healthcare coverage in the state.

In SB 48, all employers could either spend a percentage of their payroll toward employee health insurance or pay an equivalent amount into a healthcare trust fund, which would offer plans from private insurers. Insurance companies that wanted to participate in the fund would be required to restrain administrative expenses and provide a basic level of benefits. Working individuals would be required to purchase coverage for themselves and their dependants via their employers or the fund; out-of-pocket costs would be limited. For the unemployed, the plan would also expand children’s eligibility for the existing Healthy Families program.

AB 13 covers otherwise uninsured employees and their dependents through a purchasing pool paid for by employers that have two or more employees and do not offer healthcare coverage. As with the trust fund in Perata’s bill, this pool would offer healthcare coverage from private insurance companies. Workers offered coverage from their employers would be required to accept it unless premiums and out-of-pocket costs exceeded a certain level, in which case they could buy insurance from the pool. Individuals and the self-employed could buy into the pool, which would offer several plans, each of which would provide a minimum set of benefits. As with the Perata bill, the Healthy Families plan would be expanded to offer more public healthcare for the poorest children.

In their present forms, these bills are limited because they emphasize covering the employed and because they mandate that insurance will be funded by a percentage of wages, which may not be enough for all workers in the state, much less all Californians. Nor do these bills specify what is meant by basic coverage, which may mean that the insurance that is offered isn’t adequate.

Schwarzenegger’s plan, which was unveiled Monday, doesn’t do anything to solve these problems and creates some new ones. His plan mandates that every individual have insurance (not just every worker), yet it doesn’t ensure that coverage will be comprehensive and affordable.

Schwarzenegger also calls for increasing reimbursements paid to providers under public programs by billions of dollars. Like Perata and Nuñez, the governor would expand the Healthy Families program to help pay for insurance for the poorest children in the state.

How does he pay for it? Individuals and employers will contribute, but employers are required to spend only 4% of payroll to insure their employees, or contribute the same amount to a state fund. This is not sufficient to purchase insurance for the working uninsured, who will be required to have it. This means that the governor’s plan can at best provide high-cost, low-benefit plans for many Californians; it limits what employers pay but not what individuals must pay or what insurance companies can charge.

A portion of the funding for the plan would also come from federal money that is at this point only “hoped for.” There also would be a tax on providers, such as doctors and hospitals, and the governor would redirect public money now spent on poor people in hospitals to insurance companies. This would create an immediate problem for hospitals, which are already closing because of inadequate reimbursement from private insurance companies.

Finally, the governor would adopt President Bush’s plan for individual health savings accounts by requiring employers to “allow” employees to put away money, pretax, to pay for unreimbursed medical expenses. These accounts effectively shift the costs and liability of healthcare away from insurance companies and onto consumers. Such a plan would not benefit people who are already too strapped to meet current expenses, and it does nothing to expand coverage or affordability.

The fourth proposal before the Legislature is SB 840, which I wrote last year. It is the only proposal that establishes universal, affordable, comprehensive health insurance for all Californians and guarantees the right of each patient to choose his or her doctor.

SB 840 would replace insurance companies with a statewide trust fund that collects premiums paid by employers and individuals, who together would share the responsibility for funding the program. The creation of a single state fund reduces the administrative portion of California’s healthcare costs from nearly 30% to under 10%. With everyone in one pool, which spreads the risk as widely as possible, no one would be denied coverage for a preexisting condition. Individuals would be free to change jobs, start a business, go to school or start a family without losing coverage or doctors they trust.

SB 840 mandates truly comprehensive coverage; it keeps down the overall cost of healthcare; and it specifically limits the out-of-pocket costs to individuals.

The governor says he will not sign a universal insurance bill. Nevertheless, the Legislature will continue to develop the plan as the only long-term, universal solution to the health crisis.

I’m committed to working with all stakeholders — the governor, the Legislature, medical professionals, labor, business and consumers — to craft real healthcare reform this session. I believe that SB 840 provides the best way to meet the goal of universal healthcare for Californians.

Any other incremental reform must move us toward that goal.