PROPOSITION 166 : Vote on Health Care Watched Across U.S.

Californians will go to the polls Nov. 3 with many of the nation’s health care reformers intently awaiting their verdict on Proposition 166.

The measure--the first health reform proposal in the nation to be put before voters--would compel employers to provide health insurance to employees who work more than 17 1/2 hours a week, and to their families.

But the view of Proposition 166 among reformers outside the state bears little resemblance to the way those in California see the measure. The difference in perspectives is something like looking at an object through either end of a telescope.

The outsiders see the initiative mostly as symbolic. They eagerly compare the prospect of a big yes vote on Proposition 166 to the 1990 upset victory of Sen. Harris Wofford (D-Pa.), who capitalized on voters’ frustration with the cost and inaccessibility of health care.

“If nothing else, it will accelerate some kind of action” nationally on health care reform, said Kala Ladenheim of the Intergovernmental Health Policy Project at George Washington University.

Within the state, the measure sponsored by the California Medical Assn. is undergoing microscopic scrutiny. Coalitions of health care providers, businesses, insurance companies and consumer groups oppose Proposition 166, saying the proposed law would saddle small businesses with crippling costs while only partly addressing the needs of 6 million Californians who lack health insurance.

The proposal is a daunting length of technical language, detailing what medical services are covered, who pays how much, and what data various advisory commissions will collect to monitor such things as the cost and quality of medical care.

If the measure does not confuse voters, the media campaigns should. Both sides are gearing up for emotional appeals, pitched to voters’ fears about the bad economy, an increasingly out-of-reach health care system, greedy doctors and potentially ruinous illness.

The Consumer Health Insurance Coalition has prepared an eye-catching brochure describing Proposition 166 as “bad medicine” that “gives many physicians a huge bonus at the expense of taxpayers, employers and employees.” The coalition is primarily financed by insurance companies.

In a recent letter to doctors, the Los Angeles County Medical Assn. counters by labeling the coalition as a “fraudulent” front for “large East Coast commercial health insurance carriers.”

The California Medical Assn. was once as vehemently opposed as anyone to health care reform by initiative.

For two years, the association was part of a group of health care, business, labor, insurance and consumer organizations working on a joint proposal. Their efforts--like those of counterparts in more than a dozen states--were directed at the Legislature, which was thought to offer the best chance of reaching a workable reform plan.

California’s budget crisis derailed the cooperative effort. Most health reform bills backed by coalition members died in committee. Against that backdrop, the CMA decided that its proposal was too urgently needed to wait for the next legislative session--a position supported by polls showing strong public support for reform of the health care system.

“The people want it,” said Dr. Marie G. Kuffner, a CMA trustee and president of the Los Angeles County Medical Assn. “The county health systems were deteriorating daily. We felt the timing was right and we had to go forward before the whole health care system collapsed.”

An early September survey by the Field Poll showed that 55% of voters favored Proposition 166 and 32% opposed it. But it was unclear whether the results indicated general support for improvements to the health care system or the fix offered by Proposition 166.

The medical association’s proposal--called Affordable Basic Health Care--only addresses the health insurance needs of the employed. Theoretically, it would take care of about 4.7 million of the 6 million uninsured Californians, according to an analysis by the UCLA School of Public Health.

Proponents argue that this would take a huge load off the state’s financially strapped public hospitals and clinics, saving taxpayers more than $300 million annually and possibly reducing the amount that employers pay for employees’ health benefits. The CMA estimates that 12% of what California employers pay for health insurance, or $4 billion, represents a subsidy for care of the uninsured.

A big question, though, is whether the 30% of employers who are not providing health insurance can afford the costs Proposition 166 would impose--particularly in the worst economic downturn in California since the Great Depression.

Gov. Pete Wilson, for one, does not think so. He believes Proposition 166 could “end up driving more businesses out of state and pushing unemployment higher,” according to spokeswoman Kassy Perry.

The UCLA researchers also concluded that jobs--and, with them, insurance coverage--would be lost because of the costs associated with requiring all employers to provide health insurance.

According to the analysis, some workers might have their weekly hours cut below 17 1/2 hours so their employers could escape the mandate. Others might lose part-time jobs as businesses seek to reduce the number of people in their health insurance plans. Some firms could go out of business, the researchers warn in their analysis, prepared last summer for the state Senate.

Matt and Jean Giorgi, owners of a five-employee sandwich shop in Brea, say they are considering all of the above.

“We are looking at a minimum cost of $100 per month per employee which is $500, and when you factor in dependent coverage, it is about $700. We can’t afford that,” Matt Giorgi said. “At this particular point in our business, we cannot even afford health insurance for ourselves.”

Consumer groups opposing Proposition 166 say the plan may also be too expensive for workers, especially those earning minimum wage.

The plan caps workers’ burden at 25% of the insurance premium or 2% of annual wages, whichever is less. But deductibles and co-payments for doctors’ visits and prescriptions could bring annual out-of-pocket costs for a family of four to $1,476, according to projections by Consumers Union.

“From an economic point of view, what you get is nothing on the quality of care side, and a lot of people (are) covered nominally but they may in reality not end up with any jobs,” said Robert B. Valdez, a co-author of the UCLA analysis.

The decision to go the initiative route has put CMA’s doctors largely on their own in trying to sell Proposition 166 to voters. Significantly, they lack the support of the other two legs of the conventional health care tripod: hospitals and health insurers.

C. Duane Dauner, president of the powerful California Assn. of Hospitals and Health Systems, said the proposal lacks enough cost controls to prevent insurance premiums from rapidly rising--a criticism echoed by health insurers and consumer lobbies.

Even if Proposition 166 passes, the measure faces a final stumbling block, and by no means a small one, in federal law. The Employee Retirement and Income Security Act of 1974 prohibits states from requiring employers to provide health insurance. If Proposition 166 passes, California will have to join the line of states seeking exemptions.

Congress has been notably unwilling to grant exemptions. Only one state, Hawaii, is exempt from the employer-mandated health insurance rule. But it took the state nine years to get the waiver.