Healthcare reform: Code blue

Reaching agreement on a landmark plan for universal healthcare in California was always going to be an uphill battle. Sweeping reform has to overcome a state government that is beholden to special interests, limited in power by voter-approved initiatives and highly partisan. And healthcare reform is an incredibly complex issue because it involves some of the state’s most powerful players -- doctors, insurers, the business lobby, hospitals. With the state entering its eighth week without a budget, it’s easy to conclude that the chances for change are dwindling, if not zero.

Time is running out for passage of healthcare reform this legislative session. When lawmakers return Monday, they will have until Sept. 14 to pass a bill before adjourning. And state Senate leader Don Perata (D-Oakland) has said that no legislation will be taken up in his chamber, where the budget is stalled by 14 Republicans, until a spending plan is approved.

But for Gov. Arnold Schwarzenegger, Democratic leaders and most policymakers, the incentive to reach agreement on a healthcare plan is greater now than before the budget stalemate.

For starters, most state voters would likely forget the budget impasse if its resolution were followed by passage of bipartisan healthcare reform that attracted national attention. A June poll taken by the Public Policy Institute of California found that 72% of all adults, including a majority in each party, support universal healthcare.

Assembly Speaker Fabian Nuñez (D-Los Angeles) and Perata should be especially eager for a boost in voters’ perceptions of their leadership. The two will be termed out next year unless voters approve a more flexible term-limits initiative, slated to be on the Feb. 5 primary ballot, that could lengthen their political careers in Sacramento. In a May survey by the institute, a slim majority of 52% of all adults backed the change in the term-limits law.

Beyond the politics, though, there are other forces pushing for agreement on healthcare reform. These were evident when the governor and three state legislative leaders spoke last weekend at a daylong healthcare discussion sponsored by AmericaSpeaks, a nonpartisan organization that seeks to influence public policy by engaging large audiences. In poignant and personal anecdotes, they showed why healthcare is a different kind of issue for them.

Speaking to a satellite-connected audience of 3,500 randomly selected Californians in eight cities, Nuñez talked about growing up in a family that lacked health insurance and about a father who worked two jobs and was still forced to find home remedies for his illnesses. “Let me commit to you with every assurance that I can,” he said, “before the end of this legislative session, the California state Legislature and the governor will agree to a healthcare package.”

Assembly GOP leader Mike Villines of Clovis told about his struggle to find affordable insurance when he was between jobs and his child had a preexisting condition. “I remember these things as we go into this large policy debate,” Villines said. “Our job is to represent hardworking Californians, people who are trying to make ends meet. . . . This year, it is going to happen.”

The four leaders also warned about the risk of missing the current opportunity to achieve healthcare reform. There’s a presidential election next year, and bipartisan compromise is going to be more difficult than usual. The following year will be the twilight of Schwarzenegger’s term, and attention will naturally turn to his possible successor.

“If we do not act,” Perata said, “we will once again witness in this state an expensive initiative shootout between different interest groups that will take upon themselves to do what the Legislature should do.

“So if the Legislature wants to be relevant,” he continued. “We must act between now and the end of the legislative session to bring healthcare [reform] to a solution.”

In his comments, Schwarzenegger warned about “a healthcare system that is . . . really making a lot of people suffer.” He also accused the Senate Republicans of holding up the budget “so they don’t have to go and do healthcare reform.”

The tenuous framework of a bipartisan solution to covering the state’s estimated 6.7 million uninsured is on the table. A bill sponsored by Nuñez and Perata has much in common with Schwarzenegger’s proposal, which he calls “shared responsibility.” For instance, both would require employers to spend a percentage of their payroll on workers’ healthcare; insurers would have to spend 85% of premiums on medical care, and California would subsidize health insurance for the poor.

But Nuñez balks at the idea that all individuals must have insurance because it may not be affordable for all. Schwarzenegger’s plan calls for universal coverage.

The other major difference is how much to charge businesses and health providers. Schwarzenegger would require employers to spend 4% of their payroll on their workers’ healthcare; the Democrats would set the level at 7.5%. The governor’s plan also would collect 4% and 2% of hospitals’ and doctors’ incomes, respectively.

Here’s where things get dicey: Is the charge on employers a “fee” or a “tax”? If it’s the latter, healthcare reform would require a two-thirds majority vote in the Legislature, meaning at least eight Republican lawmakers would have to support the plan. If the charge is a “fee,” only a simple majority would be needed, which the Democratic-controlled Assembly and Senate could likely muster.

As the budget stalemate demonstrates, a two-thirds-majority vote in the Legislature may be impossible to get, in which case the Democrats and Schwarzenegger would probably have to cast their reform lot with the courts.

Privately, however, staff members in the Capitol say the biggest hurdle to an agreement is not the outline of the healthcare compromise plan. It’s that unwinding the budget stalemate will leave little time to negotiate outstanding issues. There is no indication that any of the 14 die-hard senators holding up the budget is of a mind to make a deal.

The stakes are rarely this high in Sacramento. Hanging in the balance are possible passage of the initiative that would extend legislators’ terms in office, California as a major catalyst for national healthcare reform, and a historic bipartisan achievement for an unpopular state government that has accomplished little this year.

And Schwarzenegger has much at stake too -- in particular, his legacy. As the budget stalemate reminds us, the promise of achievement amid his talk of a new era of “post-partisanship” is in jeopardy.

Schwarzenegger’s term in office has already been one of the wildest roller coaster rides in modern politics, moving from his recall election to the failed special election to last year’s bipartisan agreements on global warming and public works. The question is whether the budget stalemate is just another sharp turn on a wild ride to healthcare reform or the first sign of a return to business as usual.