Democrats offer health plan

Times Staff Writer

A month before Gov. Arnold Schwarzenegger is set to unveil a plan to make healthcare more affordable and accessible, Senate Democrats proposed Tuesday taxing both workers and employers to cover an estimated 4.2 million of 6 million uninsured Californians.

The plan, announced by Senate President Pro Tem Don Perata (D-Oakland), would mandate that workers have health insurance and require every employer, even those with a single part-time employee, to offer health insurance or pay a percentage of their payroll to a state agency that would negotiate for affordable coverage. Workers would also contribute through a payroll deduction, much as they help fund unemployment and state disability insurance.

For the record:

12:00 AM, Dec. 21, 2006 For The Record
Los Angeles Times Thursday December 21, 2006 Home Edition Main News Part A Page 2 National Desk 1 inches; 30 words Type of Material: Correction
Healthcare plan: An article in the Dec. 13 California section said that workers contribute to unemployment insurance. California’s unemployment insurance program is financed through a tax on employers, not employees.

Illegal workers who get paid under the table and the unemployed would not be covered under Perata’s plan. Nor would it affect employees who already get health benefits through their jobs.

The plan counts on additional federal dollars, but Perata said it would not require any more money from the state’s strapped general fund.


The proposal kicks off what is expected to be a year of tough negotiations in the Capitol to find ways to curb rising health insurance premiums, which have nearly doubled in the last five years, putting health insurance further out of reach of millions of Californians.

“What I am doing,” Perata said, “is challenging the Democrats and Republicans in this building, business and labor, public and private healthcare providers and other parties of interest to muster the political will necessary to compromise and conclude this issue.”

Although Schwarzenegger has expressed distaste for employer mandates such as those proposed by Perata, he heralded the Senate leader’s call for action as “fantastic.”

“The stage is set for comprehensive healthcare reform,” Schwarzenegger said in a statement. He is expected to release his own healthcare proposal in early January.


Business groups criticized Perata’s plan as a burdensome government mandate. Advocates for improved healthcare and some academic researchers praised Perata for attempting to share responsibility and cost.

“All of the workers and all of the employers have to be contributing to the cost of paying for health insurance,” said E. Richard Brown, director of UCLA’s Center for Health Policy Research. “Without those two elements together we really will not be able to create an affordable system.”

Perata’s plan would create an agency modeled on the California Public Employees’ Retirement System, which provides health benefits to 1.5 million public employees and retirees, to negotiate with private insurers such as Blue Cross and Kaiser Permanente to cover workers who don’t already get health insurance through their jobs.

This new agency would establish ground rules, such as capping administrative costs and requiring insurers to enroll people regardless of their medical conditions. It would offer workers three types of health plans and allow them to pay more for greater services and flexibility.


Perata said his staff estimated his plan would cost $5 billion to $7 billion.

To defray costs, Perata said he would seek to expand a Medi-Cal program that now covers working parents whose earnings are below the federal poverty level. The Senate leader’s plan would extend that coverage, which is partially funded by the federal government, to people earning up to three times the federal poverty level, or $48,000 for a family of three.

Much as Californians must now prove they have auto insurance when they pay annual vehicle registration fees, Perata’s plan would require workers to offer proof of health insurance when they pay taxes.

Employers attacked the plan as a “warmed-over” version of a 2003 law that required large employers to provide their workers with health insurance. Voters repealed that law in 2004 at the urging of Schwarzenegger and business groups.


“California voters and the governor have rejected play-or-pay schemes in the past as being unfairly burdensome on the small-business owners of the state who generate almost all the new jobs,” said Michael Shaw, state director of the National Federation of Independent Business. His members have on average seven or eight employees and earn less than $500,000 a year, he said. Sixty percent do not offer their employees health insurance.

A government mandate to do so, Shaw said, “is saying, ‘Here’s a broken system, I want you to pay for it.’ ”

Key details were missing from Perata’s plan, such as how much businesses would be expected to pay in payroll taxes and how workers and employers would split those costs.

But his plan would not require a huge infusion of taxpayer money, he said -- something that Republican lawmakers say they will not accept -- and the plan would not replace private insurers with a single, giant, government-run agencies that provides health insurance to all residents regardless of income or medical condition.


Last year, Schwarzenegger vetoed a bill by Sen. Sheila Kuehl (D-Santa Monica) to create such a universal health system. Kuehl said she would introduce such a measure again in 2007. She said she wanted to refine the proposal so that it ultimately can be put before the voters as an initiative or presented to a more amenable governor in the future.

“I continue to think it is the best long-term solution for California,” said Kuehl, who will play a large role in shaping legislation next year as chairwoman of the Senate Health Committee.

Kuehl called Perata’s plan “a very good and important step,” and said she would co-author his bill.