State Insurance Chief Unveils Plan to Offer Universal Coverage : Health care: John Garamendi’s proposal would give every Californian access to an HMO. Those wanting greater choice could pay more. Payroll taxes would fund it.

In a proposal some experts say throws an important new element into the national debate on health care, California Insurance Commissioner John Garamendi Wednesday unveiled a plan for universal health care that would have state government guarantee access while giving consumers a choice of a variety of privately managed health care providers.

The plan would sever the link in California between employment and health insurance, providing “portable,” guaranteed insurance to all workers, people with pre-existing medical conditions, those who change jobs and the unemployed. But it would not go as far as the Canadian system of nationalized health care: Private insurers would be an integral part of the system.

The $34-billion plan would be funded by a payroll tax on all employers and employees. Every California resident would have access to health care through a basic HMO plan, while those who wanted a greater choice of doctors could pay somewhat more for a more flexible “preferred provider” or indemnity plan.

The proposal, which requires legislative approval, is expected to meet stiff political opposition from groups including small insurance companies, liability lawyers and some employers. But many health industry sources agreed it was an important addition to the health care debate.

“This is nationally significant. This is a different model from anything that has been proposed,” said Dr. Paul Torrens, a widely respected UCLA professor of public health who was not involved in formulating the plan.

Garamendi said his plan “recognizes that government must guarantee benefits . . . but it also recognizes the value of consumer choice . . . and of leaving the delivery of health care to private health care delivery systems.” The plan goes beyond most other reform proposals by bringing the health component of workers’ compensation, auto and homeowner’s insurance into a system of “24-hour coverage.” In effect, it would eliminate the need for health coverage under the expensive, troubled workers’ comp system by providing 24-hour health care coverage regardless of whether an injury happened at home or on the job. Auto injuries would also be covered under the plan.

The plan is far more sweeping than incremental reforms recently proposed by President George Bush. It is more extensive than a plan recently proposed by the California Medical Assn. that would require virtually all employers to buy health insurance for their employees. And it goes beyond most “pay-or-play” health reform proposals, because it puts all employee health care resources into a single pool, spreading risk most widely.

The plan is similar to but less radical than one proposed by the group Health Access and state Sen. Nicholas C. Petris (D-Oakland), which won a majority of votes in the Senate but failed to obtain the necessary two-thirds to pass two weeks ago. Like Garamendi’s plan, Health Access would provide universal coverage, but less chance for consumers to opt out of the system by paying more.

Garamendi’s plan would establish regional “health insurance purchasing corporations” that would collect premiums and purchase private health insurance according to consumers’ individual choices. No insurer could turn down an individual for coverage, and each insurer would be paid the same amount for each individual who chooses that plan, with adjustments for risk factors such as age and sex.

The plan would not increase the total amount of money going into the health care system, Garamendi said. Instead, because cost-shifting from uninsured workers to insured workers would be eliminated, current funds would be sufficient to provide care for all, including 6 million Californians now uninsured, he argued. The plan would impose a 6.75% tax on employers’ payrolls to finance coverage--less than the average 8% of payroll Garamendi says employers now pay for health insurance. Small employers would pay from 4% to 5% of payroll. Employees will also contribute funds. Workers will pay 1% of their paychecks for coverage, with high-income workers paying somewhat more, low-income workers less.

Garamendi said that consolidating workers’ compensation health benefits into a universal plan would save $1 billion and reduce workers’ comp premiums by at least 25%. Rolling auto insurance health benefits into the overall health plan would reduce auto insurance premiums by at least 15%, he said.

Garamendi said his plan would be introduced as a bill in the Legislature later this year. It would not immediately affect people covered by Medicare or Medicaid.