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Health Care in California: An Essay by Senator Sheila Kuehl

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By State Senator Sheila Kuehl

This is my first essay for 2007. It addresses the topic that seems to be on everyone’s minds, lips and agenda this year: healthcare.

These essays are my presentation of facts not generally reported or summarized by the press. Visit my website to read my previous essays.

First, A Few Factoids about California and Healthcare

One in five Californians has no health insurance at all and most of these people are average working people. Usually, their employer is one of the many who does not provide healthcare coverage and they don’t make enough to pay for an individual policy for them and their family.

Of those Californians who do have insurance, many are underinsured and are very surprised to discover that their insurance doesn’t cover a large chunk of their costs if they get sick or injured. In fact half of all the personal bankruptcies in America are caused by medical costs and three-quarters of those bankrupted had insurance at the time they became ill or injured.

People are also very worried about losing the insurance they might get at work because employers are, more and more, cutting back on health insurance and other benefits and, of course, losing or changing your job means losing your insurance.

Plenty of money is being spent on healthcare-one out of every six dollars spent in America, it’s just not spent to cover everyone. And, while spending generally has risen by 7.5%, insurance premiums have gone up by double-digits every year for the last five. Wages have increased only 1.7%. Costs are getting shifted to patients and physicians are not getting reimbursed for their work.

In order to save money, insurance companies deny claims and treatments, narrow provider networks, exclude more and more people for “pre-existing conditions” or because they take certain kinds of prescription drugs (most of the most popular ones) or work in a particular field.

A Field Poll commissioned by the California Wellness Foundation revealed that 80% of Californians want the government to guarantee access to affordable healthcare coverage. When asked why healthcare costs are increasing, the majority pointed to excessive insurance company profits, followed by waste, fraud and inefficiency.

Four Healthcare Plans In Legislature

Finally, this year, healthcare is getting a lot of attention in Sacramento. As Chair of the Senate Health Committee, I am committed to working with all stakeholders: the Governor, the Legislature, medical professionals, labor, business and consumers--to work out whatever incremental reform measures can be developed for this session, at the same time as the Legislature and I continue to work on the universal healthcare bill I have authored for the past four years.

In February, I will reintroduce the most comprehensive solution to the current health care crisis, Senate Bill 840. SB 840 is the only proposal that establishes universal, affordable, comprehensive health insurance for all Californians and that guarantees the right of each patient to choose his or her own doctor. SB 840 replaces insurance companies with a state-wide trust fund that collects premiums paid by employers and individuals, sharing the responsibility for funding. This reduces the administrative portion of California's healthcare costs from nearly 30% to under 10%. With everyone in one risk pool, no one is denied coverage for a so-called pre-existing condition. Consumers are free to change jobs; start a business; go to school or start a family without losing the doctors they trust. The Governor says currently that he will not sign a universal insurance bill. Nevertheless, the Legislature will continue to develop the plan as the only long-term, universal solution to the health crisis that is going to quickly outgrow any short term incremental reform.

There are three other developing short term plans to be considered this session. Each has its virtues and a number of problems. The outstanding questions that must be resolved by any meaningful short term reform proposal are: will middle-class consumers who cannot now afford health insurance or qualify for Medi-Cal get the quality coverage they need; and will hospitals and doctors see any relief from the burdens that are putting so many of them out of business?

Proposal by President of the Senate

State Senate President pro tem Don Perata's Senate Bill 48 would cover Californians who are employed, as well as their dependants. Employers could either spend a percentage of their payroll toward employee health insurance or pay an equivalent amount into a health care trust fund. The fund would then buy a few insurance plans from private insurance companies, and uninsured employees would be required to pick one. Insurance companies wanting to offer coverage through the fund would be required to restrain administrative expenses and provide a basic level of benefits. Working individuals would be required to purchase coverage for themselves and their dependants. The plan also expands children’s eligibility for existing public programs. The bill does not indicate if all employees must be covered when employers provide the insurance, nor what basic coverage is required, which could leave many workers without coverage and mandated to buy it themselves. The bill is still sketchy and will be worked on throughout the year, along with the two set out below.

Proposal by the Speaker of the Assembly

Assembly Bill 13, by Assembly Speaker Fabian Nunez, covers employees and their dependents through a purchasing pool of fees paid by employers that have two or more employees and do not offer health care coverage. This pool buys healthcare coverage from private insurance companies. Workers offered coverage from their employers would be required to accept coverage for themselves and their dependants unless premiums and out-of-pocket costs exceed a certain level of income, in which case they can buy their insurance from the pool. The money paid for premiums would be pre-tax dollars. Individuals and the self-employed could buy in to the pool, which would offer a choice among several plans, each of which must provide at least a minimum set of benefits. Lately, there has been a proliferation of so-called "basic" plans, so minimal they are really a sham, requiring huge deductibles; offering no pregnancy coverage, and offering very low hospital reimbursement rates. Both legislative proposals would try to set a floor for benefits from employers and from the pool. Again, affordability, funding and coverage issues remain to be worked out.

Proposal by the Governor

The foundation of the Governor’s plan is a mandate requiring every Californian to have health insurance. The proposal would allow, and even encourage, the proliferation of bare-bones plans with deductibles as high as $5,000 as well as requiring patients to spend an additional $7500 for procedures refused by their insurance company. This very troubling proposal does not at all address how plans will be affordable or adequate for Californians who are mandated to buy them, nor who will pay for uncovered procedures above the $12,500 ceiling. In addition, every employer is required to spend 4 % of payroll to buy insurance, either from insurance companies directly or through a state fund. This percentage of payroll is not actually sufficient to purchase insurance for the working uninsured and there is no limit to what employees would pay, no cost control and therefore, no premium control.

The Governor, like Sen. Perata and Speaker Nunez, would use public monies to cover all children living in families earning less than 300% of the Federal Poverty Guidelines (about $39,000 for a single parent with one child or $60,000 for a family of four) by buying insurance, again from private companies. No plan details exactly how the rest of California’s uninsured children would be covered. He also calls for significantly increasing reimbursements paid to providers under public programs by billions of dollars.

Under the Governor’s proposal, a portion of the funding for all of this would come from a tax on providers such as doctors and hospitals, as well as hoped for increases in federal monies. Additionally, the Governor would take money now paid to hospitals to treat indigent people and redirect it to private insurers to buy insurance for the poor. This creates an immediate problem for hospitals which are already closing at alarming rates due to inadequate reimbursements from private insurance companies along with the cost of caring for the uninsured.

Finally, the Governor would adopt President Bush's plan for individual “Health Savings Accounts” by requiring employers to “allow” employees to put away money, pre-tax, to pay for unreimbursed medical expenses. Health Savings Accounts effectively enable insurance companies to shift the costs and liability of healthcare away from them and on to consumers. Such a plan will not benefit people who are already too strapped to meet current expenses and it does nothing to expand coverage or affordability.

Actions in 2007

This year, and perhaps the next, the Legislature will work out some compromise measures as between Sen. Perata’s plan, the Speaker’s plan and the Governor’s plan. At the same time, we will continue to work on the long-term solution which must be universal, affordable, comprehensive in its coverage and protect choice of providers and quality. So far, that’s only SB 840. Any incremental legislation must surely move us in that direction and, at the very least, Do No Harm.

Posted on January 11, 2007

Comments

senator- please read and absorb these words as they are the feelings of most middle class californians.
close the border to mexico for immigration. stop all medical, schooling and social benefits to illegal immigrants and their offspring. finally, deport all felons presently in our jail systems back to their country of origin.
no new schools, no new prisons, no new dams and no more taxation without representation.
enough is enough. deport them, don't reward them!

Posted by: ANDY FILKINS at January 11, 2007 01:21 PM

senator-please read and absorb these words as they are the feelings of most educated and thoughtful Californians.
the mission of public health is to address hazards for all Californians. when children have been identified as primary vectors of influenza, it doesn't take a middle class genius to understand germs don't need a green card, and all Californians are at risk - legal and illegal. Don't touch that doorknob!
Californians are beset with a very sick health care system; it's so complex, it takes a graduate level degree to understand it. That's unfortunate because those who can't, like Andy, can only do what the ignorant always do, find scapegoats - the current right wing Sturmabteilung solution: illegal aliens.
Andy, with the old right-wing pointy finger is a reminder of our cheerful Californian approach to problem-solving: exclusionary laws, migrant camps and race hysteria. His quaint revisiting of our shameful past would be mildly amusing, if not so byzantine.
I'm not saying that welfare moms who are stealing our jobs aren't a problem. But the illegal alien issue is a nonissue regarding health care. Health care needs to be available for everyone here. Otherwise, Andy and you and me and the people with names we can't pronounce will all be subject to the next pandemic.

Cordially,
Peter Pintacura

Posted by: Peter Pintacura at January 11, 2007 07:20 PM

Although I am no longer a resident of California any longer I can imagine that this type of entitlement will attract hundreds of thousands (maybe millions)of residents of neighboring states and Mexico to the Great Welfare State of California. At the same time the wave of new residents is coming in the tide of employers will be going out. Mandating employers pay a specific percentage of payroll for health care is not the solution. You did not point out that one of the escalating costs in health care is litigation and malpractice insurance. How many health care dollars are related to illegal drug use or alcohol abuse? The state wants to tax the health care providers? Whose bright idea is that? Is there anyone out there that believes that higher taxes leads to improved product quality? It will only lead to corruption and higher prices.

I am disappointed to see my former home state take the slippery slope to socialism. I know it may sound callous, but sometimes the consumer must take control of his destiny. The HSA allows the consumer to control his funds. It keeps the money out of the insurance companies' coffers and the politicians' pockets.

It is health care today. Housing is so expensive that maybe some family members have to share a bedroom. Maybe the state should provide housing for everyone and tax the home builders or existing homeowners to pay for it. If you can build enough tenements (or promise to) before the next election you will probably get enough votes to get reelected. But that is what redistribution of wealth is all about.

Posted by: G Toly at January 11, 2007 11:42 PM

Look, I'm not a Californian but even a middle class citizen living in flyover country like me can recognize socialism at work. Just what do you think hospitals, small business owners doctors and many hard working Californians are going to due if the governors healthcare plans go thru? UH, leave the state perhaps? Would you then pass laws prohibiting these people to leave? Sounds right up your alley.

Posted by: Kathy at January 12, 2007 05:13 AM

The biggest problem with government owned health insurance is that it doesn't work! It doesn't work anywhere.

There is no government program that costs less than private industry. Many of the increased costs of healthcare can be traced to governement regulations.

Perhaps we can call the single payer system the "War on Health Care". It's worked so well for poverty and drugs.

Lastly, I did not expect to live in a socialist country. The U.S. Constitution does not allow for any of these programs - let's privatize all services and leave government to do what they do best. (I just can't think of what they do best at the moment.)

Posted by: Rick Bronstein at January 12, 2007 07:42 AM

I believe that insurance companies are responsible for the health care crisis due to greed. I live in Texas and if something is not done soon to provide health insurance for everyone, who is a legal citizen in this country, we will experience a total meltdown of the whole health care system.I have to pay for my own personal health insurance and the only way to get any coverage at all is to have a huge deductable,(2,500.00) and then pay another out of pocket of (2,500.00). The premium for this abominable coverage is $177.00 per month. I was insured by another company for the last several years and even though I did not use the coverage the price escalated to $300.00 per month and the deductable was (5,000.00) plus (3,000.00) out of pocket. In essance I had no insurance for well visits or preventative care, only if I had to enter a hospital for major problems which most likely would have been caused by the lack of preventative care. This is not the system that I belive a country as wealthy as this should allow it`s people to bear. We need to get rid of the insurance companies, expand medicare so that those of us who are paying these outrageous premiums without really having insurance would be able to buy into the system with benefits for well-care as well as major medical. The premiums would be geared to income and if you are indigent then there would be no premiums. There would be a deductable and small co-pay to keep people from abusing the system and if you still wished to purchase your coverage from an insurance company then that would be your choice. There should also be a severe penalty for anyone in the health care system caught padding the bills etc. and jail time would be mandatory. I really believe this would work if done properly and it would cut out the profit of the insurance company which would allow for less costly sevices. This might be considered by some shoot from the lip people to scream socialism, but there are other countries that have had a system in place for many years and are still providing the care. We need to look at their model and try to improve it but it would only work if the people that were chosen to implement the system didn`t turn out to be appointed, political polls like (good job Brownie). The fish always rots from the head down, but this could insure that everyone gets care and we get rid of the hurky jerky system we have now.
Tom

Posted by: Tom Gates at January 12, 2007 10:50 AM

Tom, here's miss fly over country again. My husband and I have a $5,000 deductible. We pay over 20,000 ayear for health insurance. Whose fault is that? Ours. We didn't want to pay for really good coverage when we were young and healthy and now my husband has a heart condition. We made the mistake and we're willing to pay the piper, so to speak. I'm simply not willing to pay for other's mistakes also. I feel no need or responsiblity to pay for your or anyone elses coverage in any way shape or form. Businesses are in business to make profits-period and that includes insurance companies. All I know is that at this rate I'll consider myself to be lucky not to be "humanely put to sleep" when I'm 80 or so by liberals.

Posted by: Kathy at January 12, 2007 02:34 PM

I live in Canada where we have socialized medicine. You should become aware of the negative side of this. There is a very long waiting list for surgeries. Many Canadians fly to the U.S. to have these surgeries done. Further, you cannot see a specialist without a referral from your family physician. That means it is a pain in the [bleep] to have to take more time off work to sit and wait for hours to see a GP who will give you "permission" to see a specialist. The other negative part to socialized medicine is that the government dictates how much the fee will be. This doesn't encourage good doctors to stay in Canada, and they often relocate to where the pay is better. That leaves a severe shortage of good doctors. Finally, socialized medicine keeps a record of every single time you visit a doctor and why. When you go to pick up a prescription, your whole medical history is in the chemist's computer. Every drug you take, including any psyche med, can be used against you in a court of law. Big Brother knows EVERYTHING about you. Fortunately for me I have been extremely healthy and this is a good thing for me, but will it be for YOU?

Posted by: Diane Booth at January 14, 2007 08:33 AM

Providing state sponsored insurance in a diverse, open border state will be a challenge. California is not Finland, where "we are all in the same boat." Nor is it Japan, where a "ware ware" perspective might provide some support for a common action. It is hard to see how universal health care would be supported in California absent a pragmatic calculation of the numbers showing a clear economic benefit. And the Governor's math is wrong.
Will be interesting to watch.

Posted by: Erik Kengaard at January 15, 2007 02:54 PM

All or nothing. How does it make sense that each state should progress with it's own unique system for providing health care? The issue needs to be debated at a national level more seriously. We're already on a path to a "Euro-like" health care system as a nation, so it should debated in that arena. The people (an legislature) of California fail to realize each time the businesses of this state throw more in "the pot" (IE, proposed health plans) prices go up Up UP! The health care issue is overblown in this state. But if the prices of widgets needs to go up to subsidize your wonderful "health care for all" (deserving and undeserving "citizens" -- whatever constitutes a citizen anymore)... SO BE IT!

Posted by: Jason at January 15, 2007 11:00 PM

I just hope that Kaiser "Health Care" is not the hidden ones behind these proposed new socialized Med laws.

Ask anyone unfortunate enough to be 'covered' by Kaiser, what it's like!! I fight them all the time for proper care for my father, who bought coverage from them years ago, as a small business person. They have turned Socliaistic, imo!

No Kaiser & NO Socialized Medicine like Canada has!!!

Posted by: Steve at February 7, 2007 10:41 AM

Those of you who warn about socialized medicine, do you realize that we already have it? Socialized medicine is using money from healthier people to pay medical costs from less healthy people. We have 2 systems of socialized medicine in this country: one for the insured, and one for the uninsured that the insured pay into.

Medical insurance is using premiums from healthy people to pay for unhealthy people. Hospitals are required to treat uninsured, and money from our taxes, insurance premiums, and hospital costs goes to pay for indigents. So for those who don't want want to pay for others, realize that you already are! You're embracing what you say you want to avoid.

Posted by: Anthony at May 5, 2007 12:06 PM

Vote SB 840! It will fix the current health care crisis by ensuring access to health care for all, save the taxpayers money, and stop filling the pockets of greedy insurance corporations.
Over the years I have witnessed and heard many stories of hard working people who refuse hospitalization and surgery because they have no insurance or are underinsured. Others have poor health because of poor or no access to regular care.
Employers are dropping or cutting back on expensive insurance. Time for a change. Go SB 840!!

Posted by: Margaret Murphy, RN at June 28, 2007 07:06 PM

It amazes me how many people say they believe in free markets, but suggest that we need to socialize medicine. The problems we face in health care can be traced, in part, to our existing socialized health care system, called Medicare/Medicaid. Like all government systems it is bloated and inefficient. Time after time you hear about doctors performing simple procedures costing and charging many times what should be reasonably expected. To be sure, there are many factors for why they do this--not the least of which is the fact that it's a government run system that tacitly allows it. Actuarial data is ignored in favor of political gain. Trust no politician who wants to give you something for free or who wants to take control of an industry,

Beyond that, our existing socialized health care system changes the market base for all non-socialized medicine. Socializing medicine in California will inevitable have a negative effect on the rest of the county because the state is so big, again changing the market base.

We should not force anyone to buy health care insure (if you nationalize it, that's forcing everyone to buy). Health insurance should simply be more affordable. It can be.

To make health care affordable:

1) All individuals should deduct any health care cost from taxes, not employers. This should give rise to private pooling of risk where the patient is at the helm of the selection process, not an HR employee who makes decisions about your insurance with no knowledge or care about your needs. If an employee wishes to continue taking advantage of the pool established through employers, fine. But that shouldn't be where the advantage is.

2) Improve the quality of medical delivery--I'm not suggesting doctors are not providing quality service--the PROCESS is broken. And information is at the heart of that. Just as every other industry has improved quality delivery from information technology, the medical industry is no exception. This is a tough issue, and the medical/health industry needs much process improvement. Caveat: the patient must remain in control and her information must be secure. Undoubtedly, an information analysis of current doctor, insurer, insured, patient, lab tech, hospital, beauracrat infrastructure will reveal the inefficiency introduced by the beauraucrat.

3) Change insurance regulations to allow real competition in the marketplace. Regulations are designed around the employer-based insurance system. As a result, those who buy for themselves suffer in terms of cost.

4) Divorce the cost of managing health from politics. If you offer health care for free, then no one will be able to afford it. Get the government and politicians out of health care. Look at it this way: over decades the Big 3 automoitive companies were afraid to weather any kind of strike because of its short term effects on stock prices. Now, because they made foolish concessions to labor unions, they are asking politicians to have us taxpayers bail them out. Phoohey on that! They made their beds, now they must sleep in them. (I live in the Detroit area, so don't lecture me about autos and the need to preserve their market.)

5) Put the burden of of validating health care costs on the individual, not on a buearaucrat. Patients see ridiculous charges on the bill sent to Medicare, and they can do nothing about it. Yet the beauraucrat is clueless with regard to the true validity of the charge. Doctors are clever about these charges--they have to be to stay in business. This is bad for the entire industry. The patient and the market would provide better checks and balances.

6) Stop the trend (as in Michigan) toward linking health care to education. Gov. Granholm exposed her socialist tendencies on this one--if you don't see this, you're blind. (Reference "no worker left behind".) Politicians just can't seem to resist offering more ways to bloat the government and get into our lives.

7) Open the borders for prescription markets, however require all foreign suppliers to undergo same or more testing as domestic. Abandon the recent federal prescription drug bill. Require FDA to certify (a) first the countries with companies who wish to sell prescriptions in USA--their federal processes must be as rigorous as the USA's (b) require clear indication of certification with each product.

8) Stress preventive health care, especially how truly unhealthy most of our food supply has become with all of the "advances" in food preservation and additives. The surgeon general should be leading the charge on this. More tomatoes and less twinkies equals better health and lower cost.

9) Honor our committments to the elderly, but notify those who still have a couple decades before reaching that age that entitlements won't be there. Let's phase out a broken system, before it breaks the USA.

Posted by: esub-blogger at July 13, 2007 12:07 PM

Make it illegal to buy your own care outside of the system? sounds like North Korea, Cuba or Canada.

too bad, you won't be getting that lobotomy anytime soon.

Posted by: Tom Jones at July 18, 2007 10:06 AM

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