Health Care Reform in California, Climate Change's Impact on Low-Income Households, & the Economic Costs of Anti-Immigrant Legis

Health Care Reform in California, Climate Change's Impact on Low-Income Households, & the Economic Costs of Anti-Immigrant Legislation

Thursday, December 20th, 2007

Dispatch Hiatus

The Dispatch will be on hiatus next week, but will return at the beginning of 2008.


BY Adam Thompson

California Assembly Advances Health Care Reform, Future is Uncertain

On Monday, the California Assembly passed a compromise health care reform measure that is intended to bring health care to at least 70% of the state's uninsured and reduce costs for everyone. The compromise measure was crafted by the Speaker and Senate President to mitigate concerns that led Governor Schwarzenegger to veto an earlier version. This time, Governor Schwarzenegger hailed the vote, calling it "courageous" and saying "we are closer than ever to fixing our broken healthcare system."

The measure, however, which includes robust expansions of public programs, stronger insurance regulations, and would require all residents to have coverage, faces an uncertain future in the Senate and before the voters in 2008. It also weakens proposed affordability protections that would have limited a family's risk from high health care costs.

Access and Affordability Protections
The $14.4 billion plan, called the Health Care Security and Cost Reduction Act, would extend coverage to 70% of the state's 6.6 million uninsured, including 800,000 children. The expansion, which Health Access-California calls the largest expansion of coverage in the U.S. since the creation of Medicaid and Medicare, hinges on increasing eligibility in public programs for children, parents and adults, sliding scale tax credits and subsidies to afford coverage, and an individual mandate requiring all Californians to have a minimum set of health care benefits.

  • Public programs would be expanded for children up to 300% of the poverty line (roughly $62,000 for a family of four) and for parents and adults without children at home to 250% of poverty, roughly $25,000 for a single adult.

  • Californians with incomes between 250% and 400% of poverty ($82,000 for a family of four) would receive tax credits to help offset the cost of health insurance and aid compliance with the individual mandate. The tax credits would be provided when premiums exceed 5.5% of income.

The bill that passed the Assembly includes softer affordability protections than what was originally proposed, when affordability standards would have protected families from spending more than 6.5% of the income on total health care costs. This is a much stronger and fairer standard because it takes into account all out of pocket costs, including premiums, deductible, and co-pays. Under the revised measure, the protection only covers the cost of premium. 

However, limiting premiums to no more than 5.5% of income is a robust standard. There is also a hardship waiver if individuals or families can show that compliance with the mandate would be an undue burden. Lastly, cost and quality reforms within the measure will help to ensure the availability of afforable health insurance.

Cost and Quality Measures: Under the measure, insurance companies would no longer be able to deny individuals coverage for pre-existing conditions, and community rating protections would be instituted, protecting consumers from excessive health insurance costs because of their age or health status. And, insurance companies would be required to spend at least 85% of every dollar paid in premiums on actual medical care, effectively reducing the amount they spend on administrative costs and profits.

To help stem the tide of ever-rising costs, the measure invests in electronic health records, institutes bulk purchasing of prescription drugs, emphasizes preventive care and chronic disease management, requires providers to disclose cost and quality metrics, creates a public insurer to compete with private insurance companies, and creates a statewide purchasing pool to secure large group insurance rates for businesses and their employees.

Employers and Financing: Because proponents lack the two-thirds vote requirement in the legislature to enact a tax increase, the measure's financing will go to the voters in 2008 if the Senate follows the Assembly's lead. This would be another huge hill to climb especially since monied-interests, such as the insurance, drug and tobacco industries, would line up against the measure.

Regardless, proponents are rightfully pursuing shared responsibility of employers and the health care industry to go along with the individual mandate. The measure would require employers to spend, on a sliding scale, up to 6.5% of payroll on health care or pay the equivalent to the state to help finance coverage expansions. Elsewhere, a 4% tax on providers, which the hospitals have agreed to, would draw-down much-needed federal funds and lead to increased Medicaid provider rates. And, a $1.50 to $2.00 increase in the cigarette tax has been proposed.

An Uncertain Future:  California faces a $14 billion budget shortfall, which has led Senate President Perata to question moving forward with a major health care reform measure now. He has asked for a state report to show the health care measure's impact on the state budget and will not bring the reforms up for a vote until the new year. 

There is much more to do and more details to flesh out, but California continues to move forward and to offer models for state health care reform. While the affordability protections should be strengthened and the individual mandate remains a concern, the public expansion, employer participation, insurance regulations and cost containment provisions will help to spread access to affordable coverage for Californians. 

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BY J. Mijin Cha

Shielding Low-Income Households from the Economic Costs of Climate Change

The Center on Budget and Policy Priorities (CBPP) released a report a few weeks ago on how states can shield low-income families from the economic effects of climate change. A fundamental aspect of climate change policies is raising the price of fossil fuel energy to discourage consumption. Without proper legislation, the price increases would hit poor homes the hardest. 

However, analysis shows that various proposals to limit greenhouse gases by establishing a cap and trade system, or a carbon tax, could generate between $50-$300 billion per year by 2020, much more than what would be needed to protect vulnerable households. The CBPP report recommends a series of approaches that can be taken to protect low income households. It also sets for a two-pronged approach that entails 1) providing a "climate change rebate" to low income households through established electronic benefit transfer systems in combination with targeted tax relief through the Earned Income Tax Credit, and 2) any gaps that remain should be supplemented by an increase in the Low-Income Home Energy Assistance Program.

States have already begun implementing programs to help defray the costs associated with programs aiming to fight climate change. 

  • California's Public Utilities Commission, for instance, just implemented an unprecedented $108 million program to give incentives to low-income, single family homes to install high-performing solar installations.

  • As we highlighted earlier, Illinois gave a $1 billion rebate to consumers to provide relief from large electricity rate increases. 

  • New York just approved $5 million to provide energy efficiency measures and energy-use management education to low-income customers.  

  • Texas reinstated its low-income household discount on electricity bills that is paid for from a System Benefit Charge that was approved as part of its electric restructuring. 

  • Michigan just provided $22 million for its Low Income and Energy Efficiency Fund with funds coming from a surcharge on Detroit Edison and Consumers Energy customers.

The bottom line is that we can both create incentives to shift our economy away from environmentally-destructive fossil fuels and protect working families from the potentially regressive tax effects of cap-and-trade or carbon taxes.

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BY Nathan Newman

Costs of Anti-Immigrant Legislation

A series of recent stories highlight the economic costs states like Oklahoma and Arizona are facing as they implement anti-immigrant legislation.

Lost Tax Revenue and Job Shortages in Oklahoma:  Oklahoma's state Treasurer, Scott Meacham reported that a recent drop in sales tax revenue (4.6% below expected totals) could be explained by the apparent exodus of thousands of Hispanics due to fear of HB 1804, the controversial immigration law known as one of the strictest in the country. Advocates (and opponents) should note the Treasurer's acknowledgment that the thousands fleeing the state results in less sales tax collected on essentials like food, clothing and supplies. In preparing HB 1804, an Oklahoma House study found that undocumented immigrants contributed about $21 million a year in tax collections -- about $11 million in income tax and about $10 million in sales tax. 

Meacham also reported hearing that there are "labor supply issues" in the agricultural, energy and construction sectors in parts of the state, stating that landscape contractors were having difficulty hiring employees, even when offering jobs at $15 an hour (about twice the minimum wage). Oklahoma contractor, Jack Gray, head of Standard Roofing Co. Inc. said "We will be in the worst depression Oklahoma's ever seen if this bill stays in effect."  He reports that his company is offering good paying jobs, but cannot bid for future business due to the lack of workers caused by HB 1804.

Other negative economic effects of HB 1804 include lowering apartment values and sales by raising the cost of doing business.  Brokers and managers say that with the loss of many Hispanic workers, documented or undocumented, due to fear of HB 1804, there have been higher labor costs or labor shortages when it comes to roofing or maintaining buildings. They warn that with the investment property market usually setting prices based on income streams, any rise in operation costs are taken seriously. 

Shrinking Arizona's Economy: In Arizona, HB 2779 won't go into effect until January 1st, but that hasn't stopped it from already having a negative impact on Arizona's economy. HB 2779 is shaping up to be one of the strictest anti-immigrant laws in the country, encouraging people to contact a county sheriff's or county attorney's office to report businesses they suspect of employing an illegal immigrant. As the Wall Street Journal reported last week, Arizona businesses have been outspoken opponents of the law since before it was signed by the Governor Napolitano in July of this year. Says the president of the Arizona Chamber of Commerce and Industry, Glenn Hamer: "It's crystal-clear that the employer sanctions law will harm the state economy. It's simply a question of degree."

Hamer's statement is backed up by a recent study by the University of Arizona's Udall Center that concluded that economic output would drop 8.2% annually if non-citizen foreign-born workers were removed from the labor force. Two-thirds of Arizona's foreign-born workforce is estimated to be working in the state without legal authorization.

Judith Gans, the author of the University of Arizona study, told the Wall Street Journal that, "Getting rid of these workers means we are deciding as a matter of policy to shrink our economy. They're filling vital gaps in our labor force."

Ironically, the shortage of workers in Arizona has helped drive at least one company to outsource work to Mexico. Sheridan Bailey, the president of steel-beam manufacturer Ironco, has he's signed a deal to outsource some of his business' production to a Mexican company in order to cope with Arizona's now tight labor market. Bailey told the Wall Street Journal that, "This law has the potential of sinking a business."  HB 2779 may also stall business growth. Arizona's biggest franchisee and grandson of the founder of Carl's Jr. fast-food restaurants, Jason Levecke, has put on hold plans to open 20 more outlets statewide, stating that, "That's $30 million that could blow up in my face. The risk is too great."

The Udall Center study cited in the Wall Street Journal, Immigrants in Arizona: Fiscal and Economic Impacts, found that the fiscal cost of immigrants to Arizona in 2004 was an estimated $1.4 billion.  However, tax revenues attributable to immigrants as workers were approximately $2.4 billion.  The net fiscal gain for Arizona from immigration then is approximately $940 million.  These numbers don't distinguish between documented and undocumented workers, but then there are reports that immigrants authorized to work are leaving Arizona due to fear and discrimination arising from HB 2779.

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Research Roundup

The Drum Major Institute has released its 2007 Year in Review, which highlights the ten best and ten worst public policies of 2007, a reading list for progressives, what the Right has been up to, and a States of the Union profile of key policy and success measures that compare the states, from availability of preschool to structurally deficient bridges to health care access.

Families USA recently released a series of reports, Too Great a Burden: American Families at Risk, which is an ongoing series of state reports on health care costs and the burdens families face in paying premiums and out-of-pocket expenses.

A new report by Demos, A Fallible 'Fail-Safe': An Analysis of Provisional Balloting Problems in the 2006 Election, examined results from the 2006 election and found chronic problems in voters being denied provisional ballots when they were entitled to one, poorly maintained voter registration lists, voting machine malfunctions, and denial of the right to cast a ballot even when voters provided proper ID. The report recommends key reforms to solve the problem.

One key reform that Demos highlights in Election Day Registration and in Anatomy of a Successful Campaign for Election Day Registration in Iowa, they detail how Iowa groups came together to promote EDR in that state, including how state and regional advocates and organizers backed these efforts by assembling an effective legislative coalition, mobilizing grassroots support and rolling out a proactive public education campaign.

Three Colorado nonprofits today released Looking Forward: Colorado's fiscal prospects after Referendum C, a new report that analyzes the effects of the TABOR tax limitation measure and both its long term effects on public investments in the state and the mild relief due to Referendum C's passage.  The message is Colorado faces sharp challenges in meeting the growing need for better schools and health care investments in the state. 

Please email us leads on good research at


Shielding Low-Income Households from the Economic Costs of Climate Change

Center on Budget and Policy Priorities - Designing Climate Change Legislation that Shields Low-Income Households From Increased Poverty and Hardship

Center on Budget and Policy Priorities - The Effects of Climate-Change Policies on the Federal Budget and the Budgets of Low-Income Households

Congressional Budget Office - Climate Change

The California Solar Initiative

Michigan - Low Income and Energy Efficiency Fund

California Assembly Advances Health Care Reform, Future is Uncertain

Health Access California - Assembly Passes Historic Health Expansion and Reform Proposal and Letter in Support of Reform Measure, If Amended

California Budget Project - Assembly Passes Health Care Reform Package

Progressive States Network - Will Special Session Yield California Health Care Reform

Progressive States Network - Individual Health Care Mandates and the Problem of Affordability

Costs of Anti-Immigrant Legislation

The Oklahoman - “Fear may cause revenue drop, treasurer says”?

Oklahoma HB 1804

The Oklahoman - “Arguments heat up over new immigration law”?

The Oklahoman - “Immigration law may raise business costs”?

Arizona HB 2779

Wall Street Journal - “Arizona Squeeze On Immigration Angers Business”?

Udall Center for Studies in Public Policy, University of Arizona - Immigrants in Arizona: Fiscal and Economic Impacts


The Stateside Dispatch is written and edited by:

Nathan Newman, Policy Director
J. Mijin Cha, Policy Specialist
Adam Thompson, Policy Specialist
John Bacino, Communications Associate

Please shoot us an email at if you have feedback, tips, suggestions, criticisms, or nominations for any of our sidebar features.

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