Health reform -- we blew it

On monday, a sweeping proposal to reform the health insurance system in California and provide coverage to the millions of Californians currently without health insurance was defeated in the Senate Health Committee.

I was the only committee member to vote in favor of the measure, which would have required nearly all Californians to obtain insurance and subsidized the premiums of those who could not afford it. I would like to explain why I supported this proposal when my 10 colleagues abandoned the effort, and why I think we lost a rare opportunity to provide healthcare to millions of people who will now continue to go without.

ABX1 1, authored by Assembly Speaker Fabian Nunez and co-sponsored by Senate President Pro Tem Don Perata, was the end product of Gov. Arnold Schwarzenegger’s “Year of Health Reform,” which began early last year. It was not a perfect bill, as both its author and the governor would be quick to tell you.

But it was a proposal that produced a large and unlikely coalition of backers. Support came from labor unions, consumer groups, ethnic and minority organizations, local governments, senior citizen advocates, provider organizations, hospitals, business groups and even some insurance companies. The chief executive of Los Angeles County, as well as the director of the county’s Department of Health Services, made impassioned pleas in support of the bill.

In choosing to vote against the bill, or abstain from voting on it altogether, many of my colleagues cited an analysis of the bill provided by the legislative analyst’s office, a nonpartisan and highly respected advisor to the Legislature. The primary risk identified by the analyst’s office was the possibility that premium costs for health insurance plans would exceed the bill’s projected cost of $250 per member per month. The analyst’s office figured -- based on the possibility of a more costly benefit package -- that if the average premium cost were $300, the purchasing pool would have a deficit of more than $4 billion by 2015.

How, you might ask, could I justify voting for a bill with that much downside risk? The short answer is, because there was so much upside potential, it was worth the risk. But more than that, I believe the risk was overstated. The projected cost was based on what Medi-Cal pays for its managed-care products. The increased provider rates in this bill were added to the Medi-Cal numbers, and the result was just $187 per member per month. The authors of ABX1 1 added 30% to allow some leeway, which resulted in the $250 projection.

It is easy to get lost in the details of such a large-scale reform effort. But it is important to step back and take a larger view of the recent history of health reform in California. In 2003, the Legislature passed SB 2, which would have required most businesses to either provide health coverage or pay a fee equal to the costs of providing coverage. This law was overturned by the voters in a referendum before it was implemented.

Beginning in 2003, Sen. Sheila Kuehl (D-Santa Monica) has authored a single-payer health insurance bill in every legislative session, to be funded with new payroll taxes. While I remain a supporter of the single-payer bills, the governor has already vetoed one such bill and has remained steadfast in his opposition to single-payer.

My Democratic colleagues, in explaining their decisions not to vote for ABX1 1, express confidence that if we keep working on it, a “consensus” solution will emerge. Given the history of this issue, I don’t share their optimism.

Health reform is complicated under the best of circumstances, and California does not enjoy the best circumstances. We have a two-thirds-vote threshold for new taxes, which makes it exceedingly difficult to provide funds for healthcare expansion.

This bill was the best chance I’ve seen since I’ve been in the Legislature of providing significant new funding. Hospitals agreed to a new tax on themselves, which would bring substantial new federal matching funds. A large and politically diverse group of supporters was prepared to wage a promising battle at the ballot box to levy a sliding-scale fee on employers and increase the tobacco tax.

Consensus would be nice. Risk-free would be even nicer. What we had instead was a rare opportunity to take a chance on a bold vision, crafted by Democratic legislators and a Republican governor working together. I hope we get another chance.