Democrats go their own way on healthcare

While Gov. Arnold Schwarzenegger makes little political headway on his proposed healthcare overhaul, Democratic legislative leaders are forging ahead with their own approach -- one that would insure millions of Californians but would not provide the universal coverage the governor seeks.

Despite three months of extensive discussions with doctors, insurers, businesses and others, the administration has not yet offered healthcare legislation. Those interests remain concerned that Schwarzenegger’s prescription will place too big a financial burden on them.

So Assembly Speaker Fabian Nunez (D-Los Angeles) and Senate President Pro Tem Don Perata (D-Oakland) have agreed to press ahead with their own program, hoping to meld legislation that each has been developing all year.

If they succeed, their healthcare vision -- not the governor’s -- will become the template for negotiations.

“Our differences are very minimal, and once we reconcile our differences, I think you’re going to have a product that fully reforms the healthcare system,” Nunez said in an interview.

The leaders’ new strategy changes the political landscape for Schwarzenegger, whose effort to impose universal coverage is being watched nationwide. The Democratic leaders would have the momentum on healthcare, and Schwarzenegger would have to negotiate with them in hopes of making their program more like his.

The Democrats still face substantial challenges. They have yet to determine how much some elements of their plan would cost and how much they could require of employers without sparking too much resistance from business groups. They also need to find enough common ground with Schwarzenegger to obtain his signature on their legislation.

Kimberly Belshe, Schwarzenegger’s health and human services secretary, said she was optimistic about the governor’s progress in negotiations, which have been going on daily in recent weeks. “We’re right where we expected to be,” she said.

But the focus now shifts to the Legislature.

With the Democrats’ plans as blueprints, businesses may be required to spend more on health insurance for employees than the 4% of payroll that Schwarzenegger has proposed. The Democrats’ ideas, like Schwarzenegger’s, would give employers the option of providing insurance or paying into a state fund that would offer it to uninsured workers and those who can’t afford individual policies.

The Democrats would not create a legal requirement that all residents obtain health coverage, which is the centerpiece of Schwarzenegger’s plan. But neither would they erase the ranks of the state’s 6.5 million uninsured residents in one swoop, as the governor’s plan would.

Rather, their plans are designed to take care of roughly two-thirds of Californians who lack coverage.

Nunez’s plan would not cover single, childless and unemployed adults. And his requirement that all employers contribute to coverage would exempt the self-employed as well as businesses that employ only one worker, have payrolls of less than $100,000 or have been operating for three years or less.

Perata’s plan mandates that everyone earning more than 400% of the federal poverty level be insured. That would apply to individuals with annual earnings of at least $40,840 and families of four earning at least $82,600.

He would require employers to provide coverage, but the self-employed would be exempt.

Both plans would insure all children, substantially extend coverage for impoverished families and help small businesses obtain affordable coverage from private carriers.

They would also limit insurers’ abilities to refuse coverage to those with preexisting conditions and to charge much more of people with a higher risk of becoming ill.

Insurers would also be limited in how much they could spend on administration and keep as profit.

The Democrats’ approaches have better prospects of passing the Legislature than the governor’s. That is because neither plan includes fees on doctors and hospitals, two politically powerful groups that Schwarzenegger wants to tap to help pay for coverage for everyone.

Republicans insist that those assessments would qualify as taxes and would need a two-thirds vote in each house of the Legislature.

Without those assessments, the Democrats’ plans do not need the votes of any Republicans, who are the minority in both chambers. Schwarzenegger has said he wants bipartisan support for his proposal, but the Democratic leaders are willing to move ahead without GOP backing if necessary.

Their plans may increase resistance from Republicans and businesses. Already, business groups have hired political consultants with an eye to repeating their 2004 success in overturning the employer health insurance mandate signed by former Gov. Gray Davis.

“For a reasonable plan to go forward, it’s going to require a consensus,” said state Sen. George Runner (R-Lancaster). “Otherwise

Republicans have advanced their own healthcare programs that do not include new mandates or taxes but would steer patients toward less expensive treatments and give them more options. However, GOP lawmakers have become disenchanted as their proposals have languished.

“We put 18 bills forward, and they’re slowly getting them killed off one by one,” said Michael Villines, the Assembly Republican leader from Clovis.

There are also more liberal Democratic proposals. One would enact strict state regulation of premium increases; another would abolish private insurers altogether in favor of a single state insurer. Schwarzenegger has made it clear that he will not sign any plan that targets just one industry in the healthcare sector.

Meanwhile, Nunez’s program is scheduled for review by an Assembly committee Tuesday, and Perata’s will go before a Senate panel Wednesday. Each Democrat-controlled committee is expected to advance its bill.

None of this means Schwarzenegger’s ideas are off the table. The Democrats want to negotiate with him, hoping to repeat their successes last year in increasing the minimum wage and clamping down on emissions that cause global warming.

And the Democrats’ plans may incorporate many of the governor’s less controversial ideas to help people avoid illness by getting in shape and to make the notoriously opaque healthcare system easier to navigate.

But Schwarzenegger’s plan relies on doctors, employers and other groups for help with funding, and those groups continue to resist his call for shared sacrifice.

“I don’t think it’s easy when you’re asking people, ‘Will you be the source of the revenue?’ ” said Allan Zaremberg, president of the California Chamber of Commerce.

Dustin Corcoran, chief lobbyist for the California Medical Assn., said the Democrats’ new intent was significant.

“They’re certainly consolidating their strength,” he said, “and putting their stake in the ground that the Democrats will control the movement of healthcare legislation this year.”

jordan.rau@latimes.com