Assembly Votes for Catastrophic Health Plan

A bipartisan Assembly majority passed landmark legislation Monday that would provide catastrophic health insurance to Californians whose medical histories make it difficult or impossible for them to obtain coverage for their illnesses.

The bill, approved on a vote of 67 to 6 and sent to the Senate, would subsidize insurance for victims of AIDS, cancer, diabetes and other “pre-existing” medical conditions that now prompt insurers to reject applications for coverage.

The measure, by Assemblyman Phillip Isenberg (D-Sacramento), would create the California Health Insurance Board and grant it broad power to develop the plan. Costs not covered by premiums would be subsidized by $30 million a year from the state’s unemployment insurance fund, tobacco tax revenue and an increase in the state disability insurance premiums already collected from all California employees.

Isenberg called the plan a “fairly modest” proposal to help keep people with serious illnesses from exhausting their resources and burdening the welfare rolls and the state’s Medi-Cal program.

“These are people who cannot be helped in any other way,” he said.

The proposal got a bipartisan boost from Republican Eric Seastrand of Salinas, who is suffering from colon cancer. Seastrand is covered by the Legislature’s health insurance plan, but he said his illness has given him new awareness of the problems faced by people with serious diseases.

“If you have a pre-existing condition, you will find it very difficult to find an insurance company to sell you insurance at any price,” Seastrand told his colleagues.

The new board the bill would create would have three members appointed by the governor and one each by the Assembly Speaker and Senate president pro tem. The board could establish benefit levels, set premiums and eligibility standards and contract with private insurers to provide the coverage. If no private insurance companies wanted to participate, the board could offer the insurance on its own.

The legislation would require that applicants for the state-run health plan be rejected by at least one private health-insurance provider. Applicants also would have to have been employed or have made contributions to the state’s unemployment insurance fund, or be a spouse or dependent of someone who has.

People who bought the health coverage from private companies with the state’s help would be guaranteed rates no higher than 125% of the average individual rate the companies charged for comparable coverage. Those covered by the plans would have to pay 20% of their medical bills up to $2,000 a year for individuals and $3,000 for families.

The bill would finance the subsidy without tapping into the state’s general tax revenues. Instead, the measure calls for $10 million from the unemployment insurance fund reserve; $10 million from new revenues provided by the increase in tobacco taxes approved by voters in November and $10 million raised by collecting disability insurance premiums on the first $22,300 of workers’ pay. Workers now pay the premiums on their first $21,900 in income.

The administrators of the state plan would be directed to limit their coverage to an amount that could be funded by the $30-million annual budget.

An Assembly analysis of Isenberg’s bill estimated that about 244,000 Californians could be considered “medically uninsurable.” But the Assembly Office of Research projected that no more than 14,600 people would enroll in the plan because of the 20% co-payment provision and a $500 deductible.

Gov. George Deukmejian has vetoed several recent attempts to establish a government-run health-insurance plan. But a spokesman for his office said Deukmejian has no position on the Isenberg legislation.