Stockton Record
January 9, 2007

Healing a Broken Health-Care System

By Hank Shaw
Capitol Bureau Chief

Gov. Arnold Schwarzenegger released details of his plan to overhaul California's health-care system Monday, adding to a growing pile of proposals that - if enacted - will transform the way Californians get and pay for medical care.

Expanding access to health care is expected to be the Legislature's signature debate this year. Everyone involved says this is the best chance in decades to fix what the governor calls "a broken system."

The Democrats, who control the Legislature, already have unveiled their own similar plans: all three proposals require sacrifices by insurers, health-care providers, employers and individuals.

At issue are the estimated 6 million Californians who live without health insurance, whose treatment costs has soared in recent years. One out of five San Joaquin residents lacks health insurance, according to 2003 data from the California Health Interview Survey. Schwarzenegger's plan would provide universal coverage for California's children, regardless of immigration status, and would require all Californians to obtain health coverage through their employer, on the open market or with a government subsidy.

Thousands of Californians - from the working poor to the well-off who choose not to buy health insurance - would be required to buy health care.

The benefit comes from numbers: Everyone insured means more people paying into the system, evening out risk to insurers and shifting the burden off local emergency rooms and toward a focus on preventive care, which is less expensive and better for patients.

It won't be cheap. The price tag for Schwarzenegger's package is about $12 billion. It hinges on $5.5 billion in new federal money, which California would use to increase payments to state doctors and hospitals for treating MediCal patients and expand eligibility for subsidized coverage.

The subsidies Schwarzenegger and the Democrats want to expand also would be fueled by what the governor describes as fees levied on doctors and hospitals, as well as on employers who decide not to provide health coverage on their own.

Official estimates for the fee would be $1 billion from employers, $3.5 billion from doctors and hospitals.

Critics say that given the federal budget's woes, relying on a huge federal windfall for nearly half the funding of the program is unwise. Congress is scrambling to find cash to maintain existing services, let alone expanding its own programs.

The Legislature's Republicans have vowed to fight any fees, and could scuttle Schwarzenegger's proposal should the governor's "fees" be deemed "taxes" by the legislature's lawyers. Tax bills need Republican votes to pass, while fees can be passed over their objections.

No matter what the lawyers determine, Assembly Minority Leader Mike Villines of Clovis says "any form of mandate on business is a jobs tax."

Villines also said he would oppose any attempt by the governor or the Democrats to provide coverage to children who are in California illegally; all three proposals in circulation would mimic San Joaquin County's Healthy Kids program, which provides care for eligible children regardless of immigration status.

"Californians have not been willing to reward illegal behavior; that's been very clear," Villines said.

Nevertheless, overwhelming majorities of Californians support proposals similar to what the governor revealed Monday, according to a Field Poll released last week. Even 61 percent of self-identified "strong conservatives" favor taxing employers who don't provide health insurance, the poll showed.

Interest groups aplenty have expressed reservations about Schwarzenegger's plans. As Senate Leader Don Perata said about his similar proposal last month: "There's something in here for everyone to hate."

Monday Perata applauded Schwarzenegger's effort: "The governor's plan recognizes that any real discussion about making health care more reliable, accessible and affordable starts with everyone giving a little."

Schwarzenegger said, "Everyone is left with a better deal here, even though they have to chip in." Workers and their children get health care, insurers get more customers, hospitals and doctors will face fewer unpaid bills and employers will have a healthier workforce.

The governor also acknowledged that his proposal will likely be altered before anything passes the Legislature.

"I look forward to a vigorous and open debate," he said. "Everything will be on the table, and I want to hear from everyone. But I know we can do this."

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Gov. Arnold Schwarzenegger's health-care proposal would affect a variety of businesses and individuals, as well as hospitals and doctors. Here's how:

• Individuals: Anyone without health insurance will be required to buy it or enroll in a government-based coverage program such as MediCal or Healthy Families. Those too poor to afford insurance on the open market will be able to buy subsidized coverage.
• Employers: Business owners who employ at least 10 workers must either offer them health coverage or pay a 4 percent "fee" to the state to do it for them.
• Hospitals and doctors: They will be required to pay a "fee" to help pay for expanded state-subsidized health coverage for the working poor. In return they'd be reimbursed more money for treating MediCal patients.