2 State Health Insurance Bills Draw Criticism

Two much-touted bills that would provide health insurance for thousands of Californians who now have no coverage came under a barrage of criticism during their introductory legislative hearing Thursday.

The most widely discussed bill, a mandatory health plan carried by Assembly Speaker Willie Brown (D-San Francisco) that would require small businesses to provide insurance for their employees, received the most criticism during the morning-long subcommittee hearing.

Business Concerns

Business leaders said costs of the program would be so high that businesses would lay off workers rather than provide them with the required coverage.

Democratic lawmakers on the Assembly subcommittee on health and workers’ insurance also raised strong objections to the other bill, which would make health insurance available to patients with histories of AIDS, diabetes, cancer and other severe medical problems.

The lawmakers complained that the measure by Assemblyman Phillip Isenberg (D-Sacramento) would cost so much--an estimated $30 million annually--and serve such a small number of Californians--about 14,000--that it would make only a small dent in the problem of providing health insurance coverage to those unable to get it today.

After the hearing, the subcommittee chairman, Assemblyman Burt Margolin (D-Los Angeles), who has submitted his own health insurance bill, said finding support that will lead to passage of any of the bills will “definitely be an uphill fight.”

In addition to the Brown and Isenberg bills, a third health insurance bill was heard by the subcommittee. It is a bill by Assemblyman Dave Elder (D-San Pedro) that would make available, for a fee, catastrophic health insurance for all Californians.

Lawmakers postponed votes on the bills for at least two weeks.

The bills represent an effort to solve problems posed by the estimated 5.2 million state residents who now lack health insurance. Isenberg said people without medical insurance who come down with severe or disabling illnesses have “two lousy options: they go without care . . . or spend themselves and their families into poverty and then qualify for public assistance.”

Speaker Brown’s bill would require employers of five or more people to provide a basic package of health care benefits. It would cover an estimated 2.5 million workers said to be unable or unwilling to provide for their own coverage. Brown contends that small businesses, by forming pools, could qualify for less expensive group insurance discounts and provide coverage for a relatively low $100-a-month per employee.

Businessmen told lawmakers during the hearing that they view the proposal as a thinly disguised tax on business and complained that the Brown bill places the burden of the insurance problem on their shoulders without addressing such fundamental problems as the high fees doctors and hospitals charge for patient care.

“How can any medical center or hospital justify charging a patient $8 for two Aspirins?” asked Ralph W. W. Davis of an association called Small Business of America. He said most employers would provide medical insurance if they could afford to simply because it would help them keep valued employees, who often jump from one firm to another because the new employer can provide medical insurance. He said mandatory health coverage “would result in employee layoffs and would discourage employers from hiring.”

Other opponents to the measure include the California Manufacturers Assn. and the state Chamber of Commerce.

The bill was supported by the California Medical Assn., hospital groups and insurers.

Isenberg’s bill would raise $30 million to subsidize a catastrophic health insurance plan for those whose medical histories make it difficult or impossible for them to buy insurance even if they can afford it. Individuals would be required to pay for the insurance, but fees would be capped at 125% of what a comparable policy would cost if they were healthy, thus requiring the subsidy. The money would come from three sources--$10 million from an increase in worker contributions to the state disability insurance fund, $10 million from employer contributions and $10 million from tobacco tax revenues.

Isenberg said he hopes that the money will encourage insurance carriers to set up plans for the estimated 280,000 diabetics and others being denied insurance. But, if private insurers do not set up plans, the legislation provides that the state set up its own insurance program.

Labor unions told legislators that they oppose the plan because it would require an increase in disability insurance fees and would also drain money from a fund that was set up to provide income protection to disabled workers.

Margolin, although saying he was in general agreement with the Isenberg bill, criticized it for “promising more than it can deliver” because the insurance could be afforded by only about 5% of the 280,000 people eligible for it. Assemblyman Patrick Johnston (D-Stockton) complained that the money to subsidize the bill would come from disability and other funds designed for other purposes.