Tax-Subsidized Health Plan Is Up to Governor

After several unsuccessful tries, the Legislature once again has presented Gov. George Deukmejian with a bill that would provide a state-subsidized health insurance for AIDS victims, diabetes sufferers and other seriously ill Californians.

Deukmejian has until Oct. 1 to make a decision on the bill, which would set up a special state-financed health insurance plan to provide coverage to anyone who gets turned down by private insurers and could afford to pay the premiums. The premiums could be no more than 25% higher than a comparable policy issued to a healthy person.

Part of an avalanche of legislation approved by the Legislature Friday night--the last day of the legislative session--the hastily amended bill passed with little debate. It received lopsided votes in both houses--30 to 2 in the Senate and 64 to 6 in the Assembly.

Deukmejian vetoed three earlier versions of the bill, a fate that may befall the current legislation since it is being opposed by Deukmejian Administration health officials.

But supporters hope Deukmejian will find it more acceptable because its $30-million-a-year state subsidy would come from Proposition 99 cigarette tax money, and it does not contain the generous benefits promised by earlier versions of the bill.

Earlier versions of the bill would have been financed by a payroll tax on workers or through savings from the state’s Medi-Cal program, which is the state’s insurer of last resort.

The new financing plan is the brainchild of Assemblyman Phillip Isenberg (D-Sacramento), who was chairman of a two-house conference committee that spent weeks fashioning a 2 1/2-year, $1.5-billion Proposition 99 spending package that was also approved by the Legislature last week.

Isenberg said his bill appropriates the interest being earned by the revenues from tobacco tax collections. Under the bill, the new plan would be administered by a five-member state commission to be called the Major Medical Insurance Board. Policies would not be issued until tobacco tax interest earnings reached $30 million. The money would go into a special fund to be used to cover costs of the plan.

“We’re trying to reach the pool of people that nobody wants to cover. These are the most difficult cases, the most expensive ones to take care of, the ones who drive the insurance actuaries crazy,” Isenberg said.

$600 Million a Year

Proposition 99 was the initiative passed last year by voters that raised cigarette taxes 25 cents a pack and mandated similar increases in other tobacco products. As a result, tobacco tax revenues increased by $600 million a year. The measure required that a share of the tax proceeds be used to help defray the health costs of the working poor--those whose incomes disqualify them from receiving county or state financial aid but who nevertheless do not earn enough to pay the costs of their own medical care.

The catastrophic health care plan did not come up during the deliberations on the $1.5-billion Proposition 99 implementation bill.

Instead, amendments that would earmark Proposition 99 revenues for the catastrophic health insurance plan were added to Isenberg’s health care bill last Wednesday at about the same time the conference committee was concluding its deliberations on the broader cigarette tax expenditure bill.

Aides to Isenberg said the assemblyman got the idea to use Proposition 99 money when he realized that the main bill implementing the initiative did not take into consideration the roughly $30 million in interest payments being generated from burgeoning collections of tobacco tax money.

Impact Uncertain

No one is certain how many Californians would be able to take advantage of the plan if it ultimately succeeds. Estimates are that 244,000 to 300,000 Californians are unable to get insurance because of preexisting conditions such as AIDS, diabetes, heart disease, cancer, lupus or epilepsy. But Isenberg’s staff is predicting that only 10,000 to 16,000 people could afford the premiums that would be placed on the new policies, estimated to range from $1,300 to $3,500 a year, depending on such factors as age and amount of deductible.

Key health groups were unwilling to comment on the bill. The American Cancer Society, for example, offered no comment on the bill, saying it had not taken a position. The American Lung Assn. of California referred calls elsewhere. A California Medical Assn. spokesman called it “step in the right direction.”

Isenberg attributed the cool reception to the lack of benefits in the bill. Past bills listed exactly what coverage would be provided, but this measure leaves specific benefits to be determined by the new commission.