California’s Health Care: Total Exam Needed : Reform is in the wind--and one ambitious and comprehensive plan is offered that does advance the debate

Any health care reform effort must meet certain criteria if it is to be taken seriously. True reform must provide coverage for all Americans, not just the well-off. And true health care reform must contain costs, which are rising astronomically.

These are tough requirements, to be sure, and very few if any health care plans pass the test. One that doesn’t quite do it is sponsored by the California Medical Assn. It has some very good elements in it and they deserve to be considered as part of the reform process. But the proposal would attempt to hold costs down largely by exhorting health care professionals to do the right thing and patients to live healthier lives. Exhortation alone won’t work. And coverage would not be extended to all Californians until 2000. That is not quick enough: Public health is in danger in a state when 6 million people have no health insurance at all.

One new plan that goes further and promises more has been proposed by California Insurance Commissioner John Garamendi. It has some problems. It faces rough political sledding in Sacramento and it may not survive intact. But it deserves respect and further consideration.

WHAT DOES THIS PLAN OFFER THAT OTHERS DON’T?

This is a state where the cost of health care is rising 20% a year and one Californian in five has no health insurance. Garamendi’s plan aims at covering everyone while still damping down costs. This is a state with big companies watching health costs eat up capital they should be investing in new ventures that would create jobs. Millions of workers here have no insurance, or too little insurance, because their companies are too small to bear the cost, or because their medical histories cause insurance companies to veer away from them.

The Garamendi plan tries to include every essential reform, something that no other current proposal can claim.

1. It is designed to cover all Californians, while trying not to raise overall costs for either employers--who pay about 75% of the cost of health care for employees--or for most workers. Most of the 6 million Californians without health insurance are workers and their families whose incomes are too large to allow them to qualify for Medi-Cal, the state health program aimed at people below the poverty line. This health care plan aspires to be comprehensive enough to provide basic treatment in or out of a hospital. Because regular health checks would be available to all, disease could be detected and treated before it required heroic and costly surgery or other procedures.

2. A worker who loses, or changes, his or her job these days too often loses health insurance. The Garamendi approach would create powerful quasi-public regional corporations to represent Californians, not employers or clinics, so that a worker who lost or changed a job wouldn’t lose health care.

3. Small businesses, which employ 42% of the state’s workers but often cannot afford health insurance for them, would gain leverage in bargaining for lower-cost health care. They would be represented by these new quasi-public corporations, much the way agents negotiate for actors.

4. The burden of paperwork that now accounts for nearly a quarter of the cost of insured health care programs would all but disappear. This is partly because the single-payer approach would so simplify billing.

5. The Garamendi plan would reorganize the controversial workers’ compensation program, whose rising costs motivate companies to look for states with lower public costs of doing business. It would fold workers’ compensation and the health aspects of automobile insurance into the new overall health plan.

HOW CAN A PLAN COVERING MORE PEOPLE REDUCE COSTS?

Unlike most other plans, the Garamendi approach has a built-in mechanism for holding down costs of health care, now rising far faster than the cost of living generally. The health insurance premium pool would be based on total personal income; medical costs would rise no faster than wages and payrolls. At least that is the hope.

Who would pay for this new system? It would be financed with contributions from employers and employees based on payrolls and wages. All businesses in the state would be required by law to participate in the plan. It could not work otherwise.

The existing network of clinics or health maintenance organizations, hospitals or doctors in private practice would not be eliminated. Health insurance purchasing corporations would be created to bargain for all medical care in a given region of California. Orange County might have two of them; Los Angeles County four or five. These corporations would control every nickel to be spent for health care in a particular region. Health care centers could not play one big employer off against another on price. This, too, could help reduce costs.

BUT WHAT ABOUT THE PRIVATE DOCTOR? NO MORE?

All doctors would sign up for the plan as well. But Californians who still wanted the freedom to choose their doctor and pay for each office or hospital visit could do so by adding perhaps as little as $50 a month to the cost of the basic plan, to cover the higher fees of private doctors.

Physicians in private practice would sign up for the plan, as would HMOs on behalf of their doctors. Those in private practice would bill regional corporations for services, get a check for the going rate for doctors working, say, at Kaiser Permanente, and collect the rest from the patients. If a procedure cost $100 at Kaiser and the private doctor wanted $140, the patient would pay $40 out of pocket or through a personal insurance plan.

Companies would contribute 6.75% of payroll to the common pool of money that would be used to buy services from HMOs, preferred providers and the rest. Companies that wanted to sweeten the health care programs they subsidize for employees would be free to do that, making their own arrangements with any provider for care beyond the basic menu of treatment that comes with the 6.75% contribution.

AND GOODBY TO WORKERS’ COMPENSATION ABUSES

Two insurance systems that add significantly to the costs of health care associated with them would be shut down and folded into the new plan.

One would be workers’ compensation, a reform that Garamendi calculates could save nearly $5 billion a year in health costs. The other is the custom of automobile insurance companies covering health costs of traffic accidents as a separate matter, which, of course, they are not.

THIS IS A START--NOW LET’S DEBATE THE ISSUE

In the past, California has often shown not only other states but also Washington the way out of public policy dilemmas. Right now, the state’s health care system is a hodgepodge and everyone recognizes it. Private firms pay too much either because of high administrative costs or because they lack bargaining leverage to reduce fees. Costs are rising for everyone.

If the Garamendi plan or anything like it were to become law in this state, it would instantly become a candidate for a federal health care model. And of course any federal plan could be crafted in such a way as to override individual state plans. But nothing like that is likely to happen this year in Washington--and perhaps not for many years. That’s why each state has to consider wrestling with its own health care problems.

No one in Sacramento is saying the Garamendi plan should pass intact, with no possibility of improvement or effort at consensual amendment. But it has many good ideas in it to help advance the California debate.