California's health care initiative: Insurance at a premium

Today's debate focuses on insurance. Yesterday, Zingale and Wright discussed the basics of Gov. Arnold Schwarzenegger's overall healthcare initiative. The rest of the week, they will debate providing coverage for people who can't or won't get it, the experience of other state plans and the problem at the federal level.

In reforming our broken health care system, it is important to recognize and fix the problems, and to identify and build on what works.

Out of 36 million Californians, more than half—almost 19 million—rely on the coverage they get through an employer. Another 10 million-seniors, people with disabilities, children, and in some cases their parents-get coverage through public insurance programs like Medi-Cal and Medicare. Health care works best when we come together to share the risk and cost of health care, either at the worksite, or through public programs.

What doesn't work? Relatively few Californians—1 million to 2 million—buy private coverage as individuals. It is often unaffordable, or in certain cases, unavailable, because of "pre-existing conditions." As the Los Angeles Times has reported, insurers often deny Californians coverage for minor ailments or even their profession, all in an effort to avoid covering people who might actually need care.

The governor has proposed some specific fixes that we support, such as "guaranteed issue" and "community rating" prohibitions to prevent insurers from denying or discriminating against patients because of their health status. But the problem is deeper than that: An individual alone simply is powerless against the big insurance companies. And the governor's proposal leaves too many individuals at the mercy of the insurance market and increasing costs.

For all its flaws, employer-based coverage is what most people have and rely on now, and much of health system is financed through employers and employees. But most importantly, employers serve a useful function to pool people together, to leverage purchasing power and help bargain for better rates.

We support group health coverage, through employers or public programs, and the bigger the group, the better. For this reason, we also support Sen. Sheila Kuehl's (D-Santa Monica) single-payer proposal, SB840, being reintroduced today, which would bring everyone together into one statewide purchasing pool, with resulting cost savings from simplification, a reduction in the money spend on administration and profit, increased purchasing power, better planning and budgeting, and a renewed focus on prevention.

While Gov. Schwarzenegger vetoed that specific bill last year, he is this year supporting some steps to strengthen group coverage, including expanding public programs for all children and poor adults, and creating a subsidized purchasing pool for those just over the poverty level. We hope he embraces the concept of group coverage more fully in legislative negotiations. Speaker Fabian Nunez and Senate President Don Perata have proposals that would set a standard for on-the-job group coverage, while also offering employers the choice of buying private coverage for their workers or participating in a statewide plan.

What we can't support is efforts to place the legal and financial burden of health coverage onto the individual consumer all alone, as with the proposed "individual mandate." High-deductible plans—which are the only types of plans many of those subject to the governor's individual mandate will be able to afford, if at all—are another example of the risk and cost of health care being shifted from employers and insurers onto consumers and families.

While many of us may be healthy today and not need care, we pay into insurance pools because we know that one of these days, by age or accident, we will need major medical care—and so we want that coverage to be comprehensive, with the cost shared with a broader group. When the system works, that's why it works. And that's the premise to build on in reform this year.

Anthony Wright, is the executive director of Health Access California, the statewide healthcare consumer advocacy coalition, which hosts a daily blog here.

Anthony, it is easy for you and I to agree we should not divorce health insurance from employment, but the fact is the marriage is about as secure as the latest match between Hollywood stars. Besides, the separation is already under way. Even so, you're overlooking the fact that the governor's plan actually does a good deal to strengthen the very system you say needs to be preserved.

Rising costs resulting from the hidden tax that people with medical insurance pay to subsidize people without it are driving more and more employers to drop coverage for employees. According to the California Health Care Foundation, less than 55 percent of Californians received their medical insurance through their employment in 2005. That's down from 59 percent five years earlier.

But even more to the point, the only way to achieve universal coverage is by pursuing the individual mandate that is a key part of the governor's plan.

The nature of work has changed dramatically in this country in recent years. The old model where people tended to stay in one job for years and could depend on that employer to provide health care benefits is far less pervasive than it used to be.

People are more mobile, independent and entrepreneurial than ever before. It's more common to hold two or more jobs, without spending enough time at either to qualify for benefits.

The individual mandate called for in the governor's plan - with subsidies for those who need financial assistance and tax cuts for employees - is a more realistic approach to getting everyone covered than simply imposing the entire burden on employers. Past reform efforts that put the entire burden on employers or government - in the case of single payer proposals - were doomed from the start because the burden was not shared.

The governor's proposal is built upon the foundation of "shared responsibility," where everyone - not just business and not just government - is asked to do their part so everyone gets covered and the hidden tax is wiped out.

In the meantime, recognizing that 60 percent of Californians with insurance - excluding those on Medi-Cal - still do get it from their employers, the governor's proposal bolsters employer coverage. It does so by reducing costs through elimination of the hidden tax (the subsidy for the uninsured) and by curbing health care inflation. It also requires employers with 10 or more workers to contribute 4 percent of their payroll to a state fund so people without insurance can buy it at reduced rates.

The governor's proposal is an equitable distribution of responsibility and benefits. And it is based on common sense and a realistic assessment of the changing nature of work. It would insure everyone, reward efforts to stay healthy, and start to wipe out the hidden tax that is a drain on our economy and a financial strain on businesses and hard-working California families.

Daniel Zingale is senior advisor to Gov. Arnold Schwarzenegger and chief of staff to Maria Shriver.