Piecemeal Reforms Win Out

The voters’ rejection of a sweeping proposed health insurance mandate on employers made many experts conclude Wednesday that piecemeal improvements may well be the only politically palatable way to address California’s large number of uninsured people and skyrocketing costs.

California’s uninsured rate is one of the highest in the country, but the defeat of Proposition 72 was the third time in a dozen years that the state’s voters rejected a chance to fix a system that everyone agrees, as Gov. Arnold Schwarzenegger put it recently, “is a mess.”

About 5.3 million Californians lack health insurance, and their medical needs are overwhelming the emergency rooms in Los Angeles County -- where six facilities have closed in the last 18 months -- and across the state.

“I don’t think it’s a terribly promising time for broad coverage initiatives nationally or at the state level,” said Jill Yegian, director of health insurance at the California Health Care Foundation, an Oakland-based philanthropic group. “The issue of the uninsured is not going away, and if this isn’t going to be the partial solution to it, it’s going to have to be something else.”

While the death of Proposition 72 showed the difficulty of enacting broad reforms, Californians agreed to allot more money to narrowly targeted healthcare programs. The common denominator to their successes was that the costs did not seem burdensome for most voters, as paying for the measures was put off to the future or was left to someone else.

Voters approved taxing people earning $1 million or more a year to improve mental health programs, borrowing $750 million to improve and expand facilities at children’s hospitals, and taking out $3 billion in loans for stem cell research. The first two measures passed even though Schwarzenegger opposed them.

Proposition 63 will raise up to $800 million annually for community clinics, assisted housing for the homeless, training programs and other services, immediately boosting spending on mental health in California by nearly 25%.

“We are going to build a system, a system that has been lacking for three decades,” said Assemblyman Darrell Steinberg (D-Sacramento), who led the campaign for Proposition 63.

Steinberg said the money would be devoted mostly to serving the mentally ill who have been neglected since state institutions were shut down decades ago. He said the state’s plan was always to replace the institutions with community-based programs for people with mental illnesses, but that never happened.

“When it comes to mental health, we have had a fail-first system, where the only way to get help is to hit bottom and wind up in a prison or hospital,” Steinberg said. “This will put an end to that.”

The immediate goal of the measure’s sponsors is to fill what they see is the void of mental health clinics, housing and training. In the program’s first several months, nearly all of the money that comes in will go toward building new facilities and expanding programs to train mental health workers.

“It’s been pretty well documented that counties have a hard time finding child psychiatrists and mental health clinicians,” said Dan Carson, an expert on healthcare spending at the nonpartisan legislative analyst’s office, which advises state lawmakers on policy. “A significant amount of money will come at the front end for education and training to expand the pool of people who can provide these services.”

In the coming years, the spending will shift toward therapy and outreach programs. Those could include programs to find people developing mental illnesses and to get them help early on.

“They are looking at programs to get kids and their families help before it reaches the point where the family dissolves and the person is estranged and homeless on the streets,” Carson said. “You get them into the system through outreach early on, and assess what is going on in their life.”

But mental health improvements involve only a small segment of California’s healthcare system.

Most health policy experts said that efforts to expand insurance would probably focus on incremental improvements in publicly funded programs that provide coverage to poor people.

The state’s Medi-Cal and Healthy Families programs have ended up treating many of the people who lost insurance provided by employers in the last decade. “Kids’ coverage is an attractive target and the one area where we have made some progress over the last five years,” said Richard Kronick, a professor of health and family medicine at UC San Diego.

Expanding state programs is difficult when the state’s budget problems are significant. Schwarzenegger has been planning for months to remake the Medi-Cal program to save $400 million a year.

“We should reform it, and we should streamline it,” Schwarzenegger said last month. “It would be more efficient and more effective for the people, so we can serve the people much better than we do right now.”

Some experts believe there are opportunities for the state to take advantage of federal money and programs to expand its health insurance offerings to more residents.

But leveraging money from Washington in some cases would require a share to be paid by the state, and in other instances would require the state to devise ways to save money by expanding managed care, rationing services, instituting co-payments or other methods.

Lucien Wulsin, director of the Insure the Uninsured Project, a Santa Monica-based foundation, said that if California put $100 million toward providing insurance to cover low-income parents, it could get $200 million from the federal government. Together, that would be enough to cover 200,000 parents, he said.

“The state hasn’t had the willingness or the money to fund that,” said John Ramey, a Sacramento healthcare consultant who fought Proposition 72. “It would cover many of the uninsured.”

Some proponents of Proposition 72 pointed out that its failure was hardly a mandate to do nothing. Indeed, it fared better than the two previous ambitious ballot initiatives: one in 1992 to require employers to provide health insurance, and another in 1994 to set up a single-payer healthcare system. Both lost by large margins.

Proposition 72 was approved by 49.1% of voters, making it the closest contest of all 16 measures on Tuesday’s ballot.

“It lost by a very tiny margin,” Said E. Richard Brown, director of UCLA’s Center for Health Policy Research. “That to me suggests that it remains an issue of really high concern to California voters.”