‘Giant step’ for health coverage

Times Staff Writers

The state Assembly on Monday approved the first phase of a $14.4-billion plan to extend medical insurance to nearly all residents, giving Gov. Arnold Schwarzenegger and his Democratic allies their first victory in a risky yearlong campaign to overhaul California’s healthcare system.

The measure, negotiated by Schwarzenegger and Assembly Speaker Fabian Nunez (D-Los Angeles), would require almost everyone in California to have insurance starting in 2010. It would provide subsidies and tax credits for those who would have trouble paying their share of the premiums.

The authors estimate that it would bring medical coverage to 3.6 million Californians, including 800,000 children, who currently don’t have it. But the plan cannot go into effect unless it passes the state Senate and voters approve a companion initiative that Schwarzenegger and Nunez are planning to place on the November ballot to finance it.


The measure, which passed the Assembly on a party-line 45-31 vote, was heralded as an important step not only for California but for a national Democratic effort to enact a similar plan for the entire country.

“California has taken a giant step forward today on something that many people thought could not be done,” Schwarzenegger said. “With the Assembly’s courageous vote . . . we are closer than ever to fixing our broken healthcare system.”

Nunez said it was no surprise the plan had been so hard to forge.

“Otherwise, in the last 90 years you would have seen a successful attempt at fundamentally reforming our broken healthcare system not only here in California but around the country,” he said.

But the measure faces a more skeptical reception in the Senate, where Democratic leaders are asking whether it makes sense to adopt such a giant change at a time when California has a projected $14-billion budget gap.

Senate President Pro Tem Don Perata (D-Oakland) did not attend a jubilant news conference with Schwarzenegger and Nunez, though he is officially a co-sponsor of the bill. He issued a muted statement praising “progress” and saying that he would ask the Legislature’s fiscal experts to determine whether the plan would become a drain on the state’s already depleted coffers.

Nunez left the financing out of the bill because it would have needed a two-thirds vote to pass, requiring some GOP support. The planned initiative would ask voters to approve taxes: $2.6 billion on employers that don’t provide healthcare, $1.5 billion on tobacco users and $2.3 billion on hospitals.


The initiative is still being drafted. But it almost certainly would have to overcome well-funded opposition from many business groups and the state’s largest insurer, Blue Cross of California.

Tobacco and drug companies might also join the fight, bringing along their substantial financial resources.

The California Chamber of Commerce, which along with the state restaurant association successfully campaigned for the repeal of the last major healthcare measure in 2004, derided the bill passed Monday as “half a proposal.”

The restaurant lobby is also opposed.

On the Assembly floor, Republican legislators -- none of whom voted for the measure -- accused Schwarzenegger of reneging on his anti-tax campaign pledge and predicted that the strategy of bypassing them by going to the ballot would not succeed.

“Our governor, a governor . . . who promised not to raise taxes, is in fact working with the majority Democrats in this body to push through the largest business tax increase in the history of California,” said Assemblyman Chuck DeVore (R-Irvine).

Past efforts to overhaul California’s healthcare system at the ballot box have failed. But backers hope that as premiums have become more expensive and more people go without coverage, the electorate will be willing to risk rewriting the rules of the health insurance market.


The unlikely partnership of a Republican governor and a Democratic Assembly speaker-- both of whom have alienated key political backers in order to find a middle ground -- has drawn nationwide attention from those hoping to replicate the plan on a national level after the 2008 presidential election. The three leading Democratic candidates, Sen. Hillary Clinton of New York, Sen. Barack Obama of Illinois and former Sen. John Edwards of North Carolina, have each proposed similar measures.

“It is precedent-setting, because California, the most populous state and diverse state in the nation, can make healthcare happen and show this country that it can be done,” said Andy Stern, the president of Service Employees International Union, who came to Sacramento from Washington, D.C., to praise the legislation.

“I believe history will show that California was the tipping point in the long-sought dream of an America where every single man, woman and child who works has a choice of secure and affordable and quality healthcare for themselves and their families,” said Stern, whose backing played a critical role in reaching a compromise.

Nunez’s 239-page bill, ABX1 1, would prohibit insurers from refusing to cover people with preexisting conditions and require them to spend at least 85% of the premiums they collect on medical care.

The bill, modeled on a Massachusetts plan that took effect during the summer, assigns a state board to the job of determining the minimum policies people would have to hold. The most limited -- and thus cheapest -- policies probably would pay for preventive care and routine doctor visits but include a $2,500 deductible for everything else, according to Nunez’s office.

The plan would help those who had the most trouble affording insurance.

Families earning up to 2 1/2 times the poverty level, or $42,925 for a family of three, would receive major state subsidies and assistance in procuring coverage.


Families earning up to four times the poverty level, or $68,680 for a family of three, would qualify for tax credits for anything they spent on premiums above 5.5% of their incomes.

Under the initiative portion of the plan, employers would have to spend an amount equal to 1% to 6.5% of their payroll on healthcare. Those that don’t would be required to pay the same amount -- based on the size of the company payroll -- to the state, which would use the money to help secure insurance for workers.

The proposed initiative would also include a tax of at least $1.50 a pack on cigarettes, and perhaps more. Only the third tax, one on hospitals that is now supported by the industry, is uncontroversial.

Some key interests, including the California Medical Assn., have not decided whether to support the plan, which has riven California’s powerful labor unions -- the core of the state’s Democratic Party.

The Teamsters, California Nurses Assn. and the leader of the California Labor Federation refused to support the bill, saying that it could burden people with the legal responsibility for buying premiums they might not be able to afford.

Stalled for months, negotiations finally jelled this month after SEIU, the largest union in the state, representing 600,000 healthcare workers, had a leadership coup and replaced its recalcitrant president with one more amenable to a compromise. Other major unions, including the California chapter of the American Federation of State, County and Municipal Employees, also came on board.


While Schwarzenegger praised the measure as bipartisan, its supporters at a news conference after the vote were largely Democratic. Of 13 speakers, only four -- including the governor -- belonged to the GOP.

One of those, Fresno Mayor Alan Autry, gave the most emotional presentation of the day, choking back tears as he recalled how his father, a farm worker, died after receiving substandard medical care that he blamed on a lack of insurance.

“It’s not a political issue,” Autry said. “It’s not an economic issue. It’s a moral issue.”



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What the bill would do

The Health Care Reform and Cost Control Act, ABX1 1, passed the state Assembly on Monday. If it passes the Senate and is signed by the governor, who supports it, voters will be asked in November to approve financing. The bill would:

* Require all Californians to enroll in a healthcare plan by July 1, 2010. A state board could exempt people who would incur “undue hardship.”


* Create a state-run purchasing pool to help people obtain policies.

* Expand Healthy Families coverage to children whose parents earn up to three times the federal poverty level, $51,510 for a family of three.

* Subsidize the premiums of families earning up to 2 1/2 times the poverty level, or $42,925 for a family of three.

* Give tax credits to families earning up to four times the poverty level, or $68,680 for a family of three -- if their share of premiums for an average-priced policy exceeds 5.5% of their incomes.

* Ban health insurance companies from refusing customers because of past ailments, age or any other factor.

* Require insurers to spend at least 85% of their collected premiums on health benefits.

* Create programs to encourage better treatment of diabetes; prevent obesity; help wean people from tobacco; and encourage the use of electronic records to keep patients’ histories and deliver drug prescriptions to pharmacies.

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Source: California Assembly