Healthcare Reform in California

March 20, 2007

Health care reform is the hot topic in Sacramento.  With 6.5 million Californians uninsured – more than any other state in the nation – reform is long overdue.

There are five plans composed of different strategies to reform health care in California.  The following is a breakdown of each plan.  So, as we begin what will likely be a long debate on health care reform, it is important to know the basics about the proposals currently on the table.

The Governor’s plan has seven elements.  They include:

• Mandating all Californians to have some form of health insurance coverage;
• Requiring insurers to guarantee coverage despite any pre-existing conditions;
• Encouraging healthy habits;
• Providing low-income individuals affordable coverage through a new state program;
• Increasing Medi-Cal rates for health care providers, hospitals, and health plans;
• Allowing Californians to make pre-tax contributions to Health Savings Accounts;
• Charging fees on employers who do not provide health coverage, as well as doctors, and hospitals to help cover increased Medi-Cal rates.

Assembly Speaker Fabian Núñez’ plan, Assembly Bill 8, focuses on increasing the availability, affordability, and accessibility of health insurance.  It emphasizes prevention and wellness, minimizing bureaucratic obstacles, and providing incentives for small businesses to provide health insurance to their workers.  Notably, the plan ensures that every California child has health coverage by expanding the state’s Healthy Families Program, which covers the children of poor working families in some counties across California, including Solano, Sonoma, and Napa Counties.

The Assembly Republicans have offered a plan composed of 18 different bills.  It would encourage Californians to save money for medical expenses in a Health Savings Account.  The plan also proposes to eliminate minimum benefits insurers must offer, allow businesses to purchase insurance policies that cover both health care and workers’ compensation, allow doctors to obtain tax credits for treating people without insurance, and require foundations created when the state allowed health plans to merge or become for-profit to spend at least 90% of their money on health care for the poor.  Finally, they would increase the amount Medi-Cal pays to doctors and hospitals.
 
Senate President Pro Tem Don Perata’s proposal, Senate Bill 48, focuses on ensuring that all of California’s working families have access to affordable health insurance.  Key elements of this plan include:

• Building on the current system of providing workers with unemployment insurance and state disability insurance, with employers and employees sharing responsibility for the cost;
• Requiring all workers to show “proof of health coverage” in order to claim certain tax credits for themselves and their dependents;
• Requiring employers to provide health insurance to their employees or contribute to a state program; and
• Expanding the Healthy Families program and Medi-Cal to cover children and their parents for households earning up to $48,000 for a family of three.

Senate Republicans are proposing a plan, SB 236, that:

• Gives tax credits and other incentives to for employers to provide health insurance for their employees, as well as to entice more physicians to accept Medi-Cal patients;
• Calls for an expansion of community clinics for uninsured patients seeking basic care, by giving incentives to encourage clinic construction; and
• Asks the Legislature and voters to change use of First Five Commission tax dollars, which currently pays for a variety of children’s programs, to only finance children’s health care initiatives.

Furthermore, Senator Sheila Kuehl has reintroduced legislation from last year to establish a “single-payer” health care system.  This proposal, known as Senate Bill 840, was approved by the Legislature last year but vetoed by Governor Schwarzenegger.  This legislation would create a state agency to pay for the health care of all Californians.  This proposal is financed by payroll and income taxes, and is aimed at reducing the administrative costs associated with health care.