Health plan is facing growing doubts

On the eve of a pivotal legislative hearing, the healthcare overhaul pushed by Gov. Arnold Schwarzenegger has won so little support in the California Senate that the Democratic leadership may have to alter a committee’s makeup for the measure to pass.

The $14.9-billion plan, which would require nearly all Californians to obtain insurance and would subsidize the premiums of those too poor to afford it, was approved last month in the state Assembly only after some of the state’s strongest labor leaders lobbied for it. The difficulty was notable because the plan was written by Assembly Speaker Fabian Nunez (D-Los Angeles).

Doubts about the plan have intensified since then. A report by the nonpartisan legislative analyst’s office released Tuesday evening questioned some of the Schwarzenegger-Nunez plan’s fiscal assumptions as too optimistic and estimated that by the fifth year of operation, the plan would be spending $300 million more than it was raising.

Even before the report’s release, many Senate Democrats expressed concerns about a grand expansion of healthcare at a time when the state is facing a $14.5-billion budget shortfall that may require large cuts in existing healthcare.

Schwarzenegger and Nunez have insisted that their plan will have no effect on the state budget. But the legislative analyst noted that the state’s general fund “would be the ultimate backstop,” and if the healthcare plan gets out of balance “it could create pressure on the general fund.”

Many senators, including Health Committee Chairwoman Sheila Kuehl (D-Santa Monica), also fear the plan would force people to buy insurance policies they could not afford.

“It would be actually harmful to working- or middle-class people,” said Kuehl, the Legislature’s strongest advocate of replacing private insurers with a government-run agency, or “single-payer” plan.

Kuehl’s committee is scheduled to consider the bill, ABX1 1, today and could vote as early as this evening. That vote is the measure’s hardest hurdle in the Senate, and if the plan passes it will almost certainly win approval before the full Senate.

The Health Committee has 11 members and thus needs six votes to pass. Five are Republican, and all but one, Abel Maldonado of Santa Maria, are sure to vote against the bill.

Kuehl said she would not support it, and on Tuesday another Democrat, Leland Yee of San Francisco, announced that neither would he.

Gloria Negrete McLeod of Chino, another Democrat on the panel, has told people she too may vote against the measure.

Senate President Pro Tem Don Perata (D-Oakland) is a co-sponsor of the bill.

People close to Perata said he wants the bill to pass out of the Senate and is considering adding several new members to the Health Committee to create a majority in favor of the bill. Alternatively, Perata could pressure lawmakers to change their votes using other incentives.

Even if the bill passed the Senate, it would not go into effect unless a companion ballot measure is approved in the November election.

That measure contains the financing for the plan: $2.5 billion in hospital taxes, an increase in tobacco taxes of $1.75 a pack and a requirement that employers spend the equivalent of up to 6.5% of their payroll costs on healthcare or pay into a state fund that would provide those workers with coverage.

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jordan.rau@latimes.com