Advertise Here

Deliver your message to thousands of readers every day.

Our readers are influential opinion makers - politicians, journalists and activists.

Learn more about ads.

Our latest headlines

Want more? Dive into the archives.

About Us

David Greenwald, Editor. (Contact David.)
CFC Education Foundation, Publisher. (Contact us.)

Got a news tip? Want to write a guest column?
Contact David here.

About California Progress Report.

Founded by Frank D. Russo (Publisher and Editor, 2006-08).

Books

The Year of Living Dangerously in Health Reform in California

By Sara Rogers
Health Consultant
Office of California State Senator Sheila Kuehl

• AB 8 (Nunez/Perata) passes Senate Health Committee
• Governor touts his “outline for health reform”
but has no legislation
• SB 840 continues as the only tested plan

In early January of this year, a flood of health insurance “reform” plans were announced, seemingly based on how fast dueling press releases could be faxed – first from Governor Schwarzenegger, then from Assembly Speaker Fabian Nunez, followed quickly by Senate President Pro Tem Don Perata. The year 2007 was precipitously baptized “the year of Health Reform” and off everyone was to summarily solve one of the most systemic, complex and politically implosive “issues” that California faces – in nine short months.

Never mind that the Governor’s plan consisted (as it still does) of a 10-page policy paper and that Legislative proposals (other than SB 840) were still in their infancy. The promise of the Governor and legislative leaders being committed to “getting something done this year” was enough to sell the idea that the vast issue of health reform could be (and ought to be) cracked in a single year.

Both Senator Perata and Speaker Nunez fleshed out their legislation over the early months of the year and then both plans were sent out to be “modeled” (that is, analyzed for cost) by the same MIT economist who had modeled the Massachusetts health reform plan, which, as we have seen in all the newspapers, has hit many road blocks in implementation, including the inability to find the kind of “affordable” health insurance plan that had been assumed in the modeling. Recently, SB 48 and AB 8 were merged into one bill, AB 8 which is jointly authored by both legislators. AB 8 sets a minimum employer contribution to health care of 7.5% of payroll, and allows employers to choose to cover their own workers with that amount (with unlimited premiums, co-pays and deductibles placed on their workers and no minimum on what is actually covered) or to pay that fee into a statewide pool that would then offer coverage to their workers, at some reduced premium. Additionally, AB 8 expands eligibility for public programs to children and parents up to 300% of the federal poverty level ($30,000 for an individual, $62,000 for a family of four).

AB 8 includes insurance market reforms such as a minimum “medical loss ratio” (insurance companies refer to payments made for the care of their insureds as “medical losses”) so that 85% of premium dollars collected by insurance companies would have to be spent on patient care. A companion bill (AB 2) authored by Assemblymember Dymally would require insurers to offer coverage to everyone except those deemed “high risk” who would be offered insurance under a separate risk pool.

Both bills passed out of the Senate Health Committee last week, and now will move to the Senate Appropriations Committee. Speaker Nunez acknowledged that his bill was still a “work in progress” with only one person speaking in support, and nearly every organization involved in health reform calling for some kind of amendment. However, since the Governor has vowed, again, to veto SB 840 when it is placed on his desk, AB 8 has emerged as the vehicle for any deliverance on the Governor’s promise of achieving “health reform this year”, and, once the budget is finished, and perhaps discussions on water and transportation are behind them, the Speaker and the Pro Tem will enter into negotiations with the Governor on a final health care solution.

A health reform bill such as AB 8 quickly becomes an immensely complex string of interacting policies, even after the broad policies have been agreed upon. However, we’re still far from there. The Governor’s outline for health reform deviates considerably from the legislative plan. There are a great number of differences between the two plans. A fundamental difference, however, is that the Governor’s plan is predicated on a universal “individual mandate” that requires every Californian to have health insurance, without any cap on premiums.

On that note, consider what didn’t pass. AB 1554, otherwise known as insurance “rate regulation”, would have provided essential protections for individuals and employers required to buy insurance despite premiums that are increasing 3-4 times faster than inflation every year. The bill would have required permission for insurance companies to raise their premiums, but it failed in the face of unrelenting opposition from health insurance companies.

AB 1554’s failure underscores a primary reason that health reform has been such a difficult nut to crack. The only way to get to universal health care while still preserving private insurance companies as the delivery system requires an enormous amount of serious regulation of insurers. First, you have to force insurers to cover people who are sick. (How do you make money covering people whose premiums are guaranteed to be less than the cost of care?) You have to force insurers to spend 85% of their premiums on health care, since it makes a lot more business sense to spend premiums on advertising and brand new ways to keep people from accessing their care. Additionally, for any private insurer-based system to function adequately, we must keep insurers from passing their own complete failure to control costs onto businesses and individuals in the form of steeply increasing premiums.

In fact, any reform plan that accomplishes anything meaningful must tackle the insurance industry head on, and do so over and over and over again. Insurers, however, are very adept at killing legislation that would accomplish meaningful reform. Insurers may claim to support universal healthcare yet they effectively kill every necessary reform for getting there.

The question of whether something good can be done this year will be determined by how successful Speaker Nunez and Sen. Perata are at forcing the Governor to stand up to insurance companies and protect Californians from soaring premiums and out of pocket expenses.

While the Governor twists himself into knots working to make pigs fly, SB 840 will be ready for him to finally notice the nice comfy airplane we’ve got ready for take off.

Posted on August 03, 2007

Comments

While controlling insurance costs (ideally by eliminating insurance companies and going to single-payer) is important, it is also important to realize that physician compensation is two or more times higher in this country than in the other G7 countries. Any true cost-containment is going to have to address this. I realize from the standpoint of building a coalition this has been ignored, but the only real way to handle the projected 30 trillion dollar shortfall in Medicare is to reduce costs in all sectors of the health-care complex.

Posted by: publius at August 3, 2007 12:38 PM

If SiCKO made you sick about our healthcare system - sign up to DO SOMETHING - STAY INVOLVED. Become our MySpace Friend and HELP US INNOVATIVELY USE THE INTERNET to fight for California's Universal Health Care Act of 2007 – Senator Sheila Kuehl Legislation SB 840.
1. DO SOMETHING - Become our MySpace Friend and Stay Involved: http://www.myspace.com/onecarenoworg
2. DO SOMETHING - Host a party 4 health care 4 all. "The Healthcare Solution: California OneCare" has been uploaded to YouTube and is available for viewing at:http://www.youtube.com/watch?v=gAWZrfYXs-c
The revised video corrects the name of the new bill to the "California Universal Healthcare Act"

Posted by: Gary Gray at August 3, 2007 12:41 PM

Tort reform,
ask John Edwards why health care is so expensive

Posted by: Mark Scott at August 3, 2007 08:00 PM

How naive or ill informed can everyone be on all sides of this debate? The author blames the high cost of health care on the insurance companies' failure to control costs. What? Insurance companies just collect premiums and pay claims. They don't really have any way to affect cost. They can change what they pay for but that is really controlled by the consumer. The public designs the benefits in the market by rejecting plans it doesn't like. Changing what is covered isn't going to affect the underlying cost of care anyway.

Then a comment posted indicates a government takeover of the system would result in lower costs. Yeah right. Look at all the great examples in our country's history of efficient government programs. (I couldn't think of any either). Besides if a government run single payer system can hold down costs, how is it that every nation in the world is getting crushed by the high cost of health care? Do your homework on this before we wind up with some really bad policy decisions.

We need people to take better care of themselves, (75% of health care spending last year went toward preventable conditions) tort reform, less protection for the pharmaceutical manufacturers from generic production (shorter patents), return of certificates of need to control over supply of health care facilities and equipment, and a host of other changes too many and lengthy to mention here. What we don't need is more regulation.

We need to quit worrying about insuring everyone. The amount of health care spending in this country will not go down if we insure everyone. People don't need insurance, they need health care. If they can get the care they need when they need it they don't need insurance. Why waste a bunch of money covering all the twenty somethings who are uninsured? We can consolidate our resources such as the VA, Indian health services, and community health centers and more and provide care to those who can't afford it.

Posted by: Tom Laster at August 5, 2007 02:17 PM

Tom, Insurance companies ARE part of the problem. They really aren't health care providers. They do all they can to NOT have to provide care, that is not what being part of a civilized society is all about. By cherry-picking only the people they want, limiting care as part of a master plan, hurts all of us, not only our health but in our debt. They want to be in business, as long as they can pass the costs onto someone else when someone gets seriously injured or sick. These and other reasons are why Insurance companies increase the costs for all of us. I do agree with you that " we " are part of the problem. Wall Street's insistence on short term profit at any cost is a societal evil when it's based on someone's health. Once we begin to believe that the health of all citizens is precious and not something to barter over, nothing will change. I think it is the first sign of a society destined to collapse. I also agree with you we need to take better care of ourselves, we're all getting too fat and that is a bad thing, but we do not need them (insurance companies) like you said, they just collect premiums and pay claims. What they do is everything they can to take a bigger cut for themselves, you know perks for the executives - we don't need these over paid paper pushers.

Posted by: Phil at August 6, 2007 06:20 PM

Any Health Care reform that includes keeping what is currently in place, insurance & the claim system will IS NOT reform at all. Insurance companies by design are for PROFIT not for care of people, no different than any other insurances business (Auto, Home, Life etc). To help you understand to follow is a short version of a true story of my employment as a young 20 year old medical administrative assistant:

Hired as receptionist in laboratory, realized some odd ethics with Medi-cal patients and excessive studies. Moved up the promotion ladder to the HMO's Vice Presidents office of a New HMO (year 1973-4). My job take applications for medi-cal patients wanting join the HMO, wait to process application until all laboratory results completed,(paid by Medi-cal) big profit for the laboratory, reject and LOSE any applications for people with ANY DIAGNOSIS that may result in COSTLY care... Who profited the owners of all three facilities: the laboratory, doctor’s office & HMO... UM that was a business man and Senator... Incidentally the senator was finally indicted for something unrelated about 10 years later. That is how insurance works still. Using existing insurance companies is NOT reform! Single payer health care will be reform and with all citizens covered then we, patients, can take care of our own health and still see a doctor when we need one and not be stuck when we are between jobs and other difficult times. We, the taxpayers are already paying for those in poverty while we ourselves do not qualify for help if we work for a small business, run our own business, or can not afford COBRA when in employment transition.
Support senate bill 840 and companion bill. Any Health Care reform that includes keeping what is currently in place, insurance & the claim system will IS NOT reform at all. Insurance companies by design are for PROFIT not for care of people, no different than any other insurances business (Auto, Home, Life etc). To help you understand to follow is a short version of a true story of my employment as a young 20 year old medical administrative assistant:

Posted by: M Sander at August 9, 2007 12:35 AM

Get the gov't off the backs of the insurance company, tort reform to lower costs, get the lawyers out.

Look what Mitt has done for Mass.

One trip to the DMV and you should know that the gov't should not run healthcare.

Posted by: Mark Scott at August 11, 2007 11:27 AM

I have a much easier time at the DMV than getting my wife's care paid for by Blue Cross.

Posted by: Jeffrey at August 14, 2007 09:15 PM

To Mark, I guess you haven't been to the DMV lately, I live in a big city, and I was in and out of the DMV in less than 25 minutes. If competent people are running it and working there it can work, same with health care.

Posted by: tom at August 28, 2007 12:53 PM

Get Email Updates

Want the California Progress Report by email? Once a week, we'll send you the latest and greatest headlines.

Stat tracker