Will special session yield California health care reform?

Will special session yield California health care reform?

Thursday, September 13th, 2007

Valuing Families

BY Adam Thompson

Will special session yield California health care reform?

Governor Schwarzenegger has promised to veto a Democratic plan to bring the state closer to universal health care that was passed earlier this week prior to the legislature's adjournment. The veto, however, is not necessarily the end of reform this year.  Schwarzenegger has already called a special session to iron out differences between his health care reform priorities rolled out earlier this year and the Democratic legislation.

The primary differences between the Governor and Democratic leadership on the scope of reform are (1) how much should employers be required to contribute to employee health care coverage and (2) should individuals be required, or mandated, to obtain health insurance? The similarities of the competing health care plans and the pronouncements by the Governor and Democratic leadership that compromise is possible bode well for major health care reform in California.

How much should employers pay?  The Democrats' plan, which melds earlier proposals from Speaker Nunez and Senate President Perata, requires all but the smallest employers to spend 7.5% of payroll on employee health care or pay the difference into a state pool to help finance health care expansions, called the California Health Insurance Purchasing Program, or Cal-CHIPP. This is the largest pay-or-play employer mandate of any major state health care reform proposal to pass both bodies. The Massachusetts and Vermont employer pay-or-play mandates are considerably less, at $295 and $365 per employee per year. Governor Schwarzenegger, for his part, wants an employer mandate of 4% of payroll and would only impose it on businesses with ten or more employees.

Should insurance be mandated?  The Democratic plan does not include an individual mandate. However, it does require employees to participate in employer-provided coverage if it is offered, unless expenses exceed 5% of the employee's family income. Employees in companies that contribute to the Cal-CHIPP pool can purchase coverage through it. Similarly, expenses in Cal-CHIPP are capped at 5% of family income for families living below 300% of poverty.

In contrast to the Democrats' plan, Governor Schwarzenegger is committed to an individual mandate.  Families without employer coverage would be able to obtain health insurance through a connector-like purchasing pool with sliding scale premiums for families with incomes below 250% of poverty. A minimum benefit option with a $5,000 deductible would be offered, although critics point out the stark economic drawbacks to high deductible insurance for low-income families. 

Areas of agreement:  Despite the differences over the employer pay-or-play fee and the individual mandate, there is much agreement between the competing plans, increasing the possibility that compromise can be reached. Each would establish a medical loss ratio of 85%, requiring insurance companies to spend no less than 85% of premium revenue on medical care. Other insurance regulations include guaranteed issue and modified community rating, allowing insurers to vary premium rates based only on age and geography, not health status or medical history.  Each plan would increase eligibility for public programs, particularly childrens' coverage through the state SCHIP program from 133% to 300% of poverty. 

Significantly, the Democrats' plan will allow public non-profit county-based health plans to join forces around the state, thereby achieving administrative efficiencies, developing a large public insured pool, and offering an alternative to for-profit health plans.

Funding, of course, remains an imposing question as lawmakers look forward to the special session. The Governor supports provider taxes that would be used to draw down additional federal Medicaid dollars and increase payments to many hospitals, a sort of tax-and-match mechanism. Although hospitals have signaled a willingness to go along with the tax, Republican legislators remain opposed and would likely oppose other possible tax increases needed to finance reform. Because a super-majority in the legislature is required to increase taxes, opponents could force the Governor to take any tax increase to the public for approval through a ballot initiative. In fact, this is a contingency plan that Governor Schwarzenegger and Speaker Nunez are considering, if compromise on a package of reforms can be reached.

Individual mandates on the cheap:  Without affordability protections, insurance mandates for individuals and families are extremely problematic. While Governor Schwarzenegger would expand public programs and offer subsidies to some low-income residents, it is unclear his measures would guarantee access to comprehensive and affordable insurance. In related news, a Colorado blue ribbon commission studying four different health care reform proposals submitted by stakeholders, has recently added its own reform plan to the mix. The commission's plan hinges on an individual mandate. But, it appears commission members who support this fifth plan may be mandating insurance on the cheap. The plan would require insurers to offer low-cost, minimum coverage plans capped at $50,000 in benefits, which is little more than insurance in name only. 

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Rewarding Work

BY Nathan Newman

"Sweatfree" Government Purchasing

Every year, state and local governments purchase hundreds of billions of dollars in goods and services. As we see toys made with lead paint produced in sweatshop conditions flood the country, many elected leaders and their constituents are demanding that new standards be imposed on those government purchasing decisions.

On August 29th, Portland, Oregon, became the latest city to pass a "Sweatfree Procurement" resolution, backed by the Portland Sweatfree Campaign, to require that purchases by the city be produced under humane working conditions. As Ed Hall, Vice President of the Portland Firefighters Association, wrote in a recent op-ed:

When I put my uniform on in the morning and start my tour of duty, I want to be assured that my pants and shirt were not made under unsafe working conditions. I want to know that the company that makes the uniform I wear with pride supports the same values the firefighters union does, for fair wages and decent working conditions.

Part of the action by the Portland resolution was an allocation of $20,000 to support funding for the emerging State and Local Government Sweatfree Consortium, a multi-state effort to pool resources for investigations and monitoring of supplier factories, and establish a committee to craft a code of conduct for contractors, subcontractors, and vendors used by such governments. This follows the city of Berkeley in July allocating $25,000 for the Consortium with other local governments like San Francisco contributing soon.

Governors from the states of Maine, New Jersey and Pennsylvania have signed onto calls for the Sweatfree Consortium with these and other local governments, and activists are working to strengthen those efforts and expand them to new jurisdictions. Sweatfree Communities, a force behind this movement, has just released a new Model Sweatfree Procurement Policy along with others resources they provide to help make sure that when governments spend money, they aren't adding to the problems they are supposed to be solving.

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Research Roundup

Despite claims by the Bush administration that extending SCHIP health coverage to more kids will undermine private health coverage, new data from the Economic Policy Institute emphasizes that 86% of SCHIP enrollees either had no coverage or lost coverage within the six months before signing up. And even the majority of those with private coverage who switched over to SCHIP cited the lack of affordability of that private coverage as the need to enroll.

In Road Privatization: Explaining the Trend, Assessing the Facts, and Protecting the Public, U.S. PIRG  analyzes how Wall Street investors are promoting deals to privatize our nation's transportation infrastructure, yet such proposals ignore the loss of democratic control and long-term budget costs of such privatization. The report lays out principles for states to use to govern such deals, including requiring fair budget paybacks, deals no longer than 30 years, complete transparency and fuller accountability.

The federal "Internet Tax Freedom Act", which comes up for renewal this year, was designed to preempt local and state governments from taxing Internet services on the argument that taxes would undermine Internet access. Yet, as the Center for Budget and Policy Priorities (CBPP) argues in a new report, the states who already had such taxes and were "grandfathered in" had broadband deployment no lower than the states without such taxes. And other countries with such taxes actually have far greater rates of broadband deployment. As CBPP argues, depriving state and local governments of the these funds may be undermining their efforts to pay for changes that could overcome the digital divide in their states.

With the first full Census figures out on New Orleans post-Katrina, the Brookings Institutition finds that the black population has declined by 57%, while its white population decreased by 36%, reflecting the general problem that the poorest residents were the most likely to be driven out of the city.

The 2007 Employer Health Benefits Survey, released on Tuesday by the Kaiser Family Foundation and Health Research and Educational Trust shows that employee premiums continue to outpace wages and inflation, with the cost of family coverage topping $12,000.  Despite the increases, employees continue to resist consumer-driven health plans, which typically have lower premiums but higher deductibles and other cost-sharing, showing that employees prefer value to lower costs.  These plans have made few gains in the employer-provided health care market. 

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Will special session yield California health care reform?

California HealthCare Foundation - Analyses of Major Proposals

Health Access California - 2007 Health Care Reform Debate

Progressive States Network - California: The Health Care Debate is On

"Sweatfree" Government Purchasing

Progressive States - Stopping Immigration at the Source: Anti-Sweatshop Legislation

Sweatfree Communities - Resources

Eye on the Right

The liberal media bias so often touted by conservatives shares a lot in common with UFOs. They're both taken for granted by a certain segment of the population, despite any significant data and in spite of logic.

The conservative media bias? Well, we've got cold hard numbers now, thanks to Media Matters. Their recent report compiled data on the publication of syndicated columnists nationwide, finding that - surprise, surprise - conservative voices significantly outweigh progressive ones.

If there's any true bias in newspapers, it's likely to rear its head on the opinion page, where syndicated columnists provide much content. In short, 60% of newspapers run more conservative columnists than progressive ones, and conservative columns' total circulation is 27 million greater than progressives'.

Perhaps most interesting, however, are the unexpected exceptions like Colorado and Montana which both lean slightly towards progressive columnists, despite facile dismissals of the "red" Mountain West.

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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

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