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The Speaker's and Governor's Healthcare Bill: Part of a Series of Essays by Sheila Kuehl

By State Senator Sheila Kuehl

This is my seventh and last essay for 2007. As I write, the Assembly has just passed Speaker Fabian Nunez's healthcare bill and it's on its way to the Senate and a hearing in the Senate Heath Committee in January. A number of people have called and emailed asking for my take on the bill and this essay will give some analysis.

Giant Leap for Health Coverage? Or for premiums...

The press has described the bill in breathless prose as a "giant leap" for health coverage. Unfortunately, this is not quite the case, depending on who you are and how and where you work. Each of the sections below will explain some of the provisions of the bill actually harmful to regular, working-class and middle-class families. And it provides less help than advertised for poor families, as well.

Coverage for everyone?

The press characterizes the bill as providing or extending coverage to all but a few Californians.

This is a mischaracterization, nothing is provided. Instead, all Californians would be required to buy insurance with no caps on premiums, no regulation of the cost of insurance or medical expense, no maximum deductibles, and no floor on how little coverage you can buy and satisfy the legal requirement. If you do not buy insurance within 62 days after the requirement kicks in, the Franchise Tax Board is authorized to collect premiums determined by the Managed Risk Medical Insurance Board by garnishment of wages or mortgage liens.

Your employer would be required to spend from 1% to 6.5% of payroll (depending on the size of the payroll) to buy insurance policies for employees. Employees would be required to take the insurance and to pay whatever supplemental premiums, co-pays and out of pocket costs are not paid by the employer. There are no caps on what the employee would pay, only for the employer. There is a vague term about hardship letting people out of the mandate, but no definition is offered and, as in Massachusetts, if you are excused from the mandatory purchase of insurance, you simply have no insurance!

If your employer does not wish to spend 1% to 6.5% of payroll on your insurance, he or she must pay the same amount into a state fund, and employees of those employers will be required to buy their insurance through the state fund, again with no cap on premiums and no floor on coverage.

Is there at least minimum coverage required in the bill?

No. For the State Fund, for those employers who choose to pay into it, the Managed Risk Medical Insurance Board will set the minimum coverage (what you get for your premiums, what conditions, services, treatments, are covered by your insurance), which will not appear in statute. For those who buy insurance on the open, private market, and those whose employers pay total or partial premiums for insurance chosen by the employer, as well as for self-employed folks, there is no minimum coverage in the bill. One woman reported to me that she had a bare-bones, catastrophic policy and, upon being rushed to the hospital, received the bill for the ambulance ride that got her there, placed on her chest, as she was carried into the hospital.

How is the bill to be financed?

There is no funding in the bill. Instead, there is the promise of an initiative, no language available yet, to tax cigarettes at an additional $1, $1.50 or $2 a pack, tax hospitals in order to draw down federal money which would then go back, to a great extent, to the public hospitals, and require employers to pay a portion of their employees' premiums, as indicated above. There is also a hope that the federal government will provide more money for children's insurance. Instead, of course, the federal government is cutting children's insurance such that the California Legislature will meet in emergency session in January to disenroll children from Healthy Families. Everything else would be paid for by premiums, co-pays and deductibles.

In addition, if the Director of Finance finds that the state cannot afford all the promises made in the bill, the bill goes away. Or does it? There needs to be clarification that, if the initiative fails, we're not still stuck with an individual mandate to buy insurance.

But how do poor people fare.....today's uninsured?

Better, but still a hardship. Healthy Families coverage for children would allow those whose families who earn up to $40,500 for one adult and one child to be covered (children only) by state or federal money. (Federal cuts mean we already have to kick kids off this program, see above). Since the bill allows all children, even those with undocumented parents, to be covered, but the feds won't pay for those children, there will be increased state costs in Healthy Families. (See budget discussion below)

Families whose income is at or less than $43,000 for a family of three would be subsidized for their premiums only. This means they would be required to pay an unspecified amount for premiums and receive an unspecified amount from the state budget to help. There is no subsidy for co-pays, deductibles or out of pocket (uninsured) expenses associated with their policies, which could be sizeable if they bought a minimal policy.

Families who earn between $43,000 and $68,680 for a family of three would be allowed to pay full boat for their uncapped premiums and then deduct any part of the premium that exceeds 5.5% of their income as a tax credit, refunded dollar for dollar by state money. (Again, see budget discussion, below). There is no tax credit for their required co-pays, deductibles or out of pocket (uninsured) expenses, which could be big if they purchased a minimal policy.

But insurance companies would be required to take everyone

That is correct. However, they are allowed to offer minimal coverage set by the Managed Risk Medical Insurance Board (minimum coverage that may be offered is not specified in the bill) and there is no control over their premiums or deductibles.

In addition, they are allowed to adjust their premiums, not by medical condition, but by age and other demographic factors.

The companies are required to spend 85% of premiums on care, but they maintain they do that now, and count marketing, information technology and other kinds of administrative overhead as care. The bill would allow this characterization to continue.

Unions seem to like the bill, don't they?

Well, some of them. SEIU, who has organized and hopes to organize healthcare workers, is positively salivating over the bill, to the extent that their national leader, Andy Stern, is engineering moving out the current state leader, who has questioned the bill, in favor of a new leader who will go along with it. AFSCME has also come on board with the bill, thinking that public employees will benefit. (However, with all the hits the bill brings on the state budget, this may be short sighted). About half of the unions in the California Labor Federation are with it, and half are against it but not taking a firm position. The California Nurses, the California School Employees and the Teamsters, among others, are strongly in opposition.

Many other troubling sections in the bill. (1) rescission

While we are struggling to keep insurance companies from rescinding policies of beneficiaries who do nothing wrong except try to use their insurance, the bill takes a step backward by applying the no retroactive rescission language only to HMO's and not to all insurers.

Troubling (2), no choice of doctors or hospitals

Your insurance company tells you who is in their provider network. Employers are not required to give a range of choices. The state fund would give a range of choices, as soon as they are determined by the Managed Risk Medical Insurance Board.

Troubling (3), more unsupervised healthcare workers

Nurse Practitioners and Physician's Assistants would be allowed, by the bill, to give written instructions (not personal supervision) to medical assistants in retail clinics, such as those proposed for Wal Mart, and the assistants would be allowed to give medication. Currently they can do so in specific clinic settings. The bill removes this requirement.

So, what's next?

The bill goes over to the Senate, into the Senate Rules Committee, which then refers it to the Senate Health Committee and any other committees that should hear it before it goes to the Floor. There may be a hearing on the bill in Senate Health on January 16th, but only if the language of the bill is in its final form according to its author, the Speaker, the requested analysis of the impact of the State Budget by the Legislative Analyst's Office is complete, and the Committee also has the language of the proposed initiative that will, supposedly, fund the bill. Any organizations wishing to support or oppose the bill may send their letters to the Senate Health Committee in Sacramento. The bill may be read online at www.leginfo.ca.gov. Press the button for Bill Information and type in ABX1 1 and click on what comes up. The author is Speaker Nunez.

Posted on December 18, 2007

Comments

Senator Keuhl is to be admired for her passion and dedication for the cause of a government-run health care system. I'm surprised, however, that she points to the curren Healthy Families crisis as a warning sign for the Governor and Speaker's compromise bill. If SB 840 were the law of the land, everyone's health care would be subject to the whim of politicians, economic crisis and the like. The role of government should be to regulate the health care system, not to run it. ABX1-1 is flawed, perhaps fatally. But if so, it's for many of the same reasons SB 840 is flawed.

Posted by: Alan at December 18, 2007 06:37 PM

Everyone, including Alan, ought to know the truth about SB840---it is a disastrous bill that will cripple California's economy and not guarantee quality affordable health-care. The budget is not in good enough shape to handle this disastrous bill.

Posted by: Darrell at December 19, 2007 04:52 AM

December 19, 2007
Response to Senator Kuehl’s 7th Essay on Healthcare Reform

Senator Kuehl’s essay is full of criticism but makes no mention of a politically viable solution. Single payer is not going to happen any time soon just because it’s good policy. But it can evolve if we start with the right framework and keep working on it. In the meantime, millions of people without adequate health insurance go without care when they are sick and some die because of it.

On the substance, there are lots of problems with how the Senator characterizes the bill. I’d like to highlight just a couple of the main points.

“Provisions of the bill actually harmful to regular, working and middle-class families…”
The status quo is harmful to regular, working and middle-class families as our healthcare rapidly deteriorates. There are protections in the bill to ensure that the mandate is not “harmful” to working and middle-class families.

“nothing is provided.”
* Public program coverage is provided to millions of Californians, including 800,000 children and over 2 million adults. Many others would be provided subsidies to get coverage.

“no regulation of the cost of insurance or medical expense, no maximum deductibles, and no floor on how little coverage you can buy…”
* Over 4-5 million people would get coverage through a statewide purchasing pool—twice the size of CALPERS--which would be able to negotiate for the best possible price.
* Now, for the first time, this bill gives a state regulator authority to set maximum deductibles and a floor that insurers can’t go below. Junk coverage is sold right now and hundreds of thousands of people have it only to find out when it’s too late.

The Senator’s comments about SEIU are offensive and just plain wrong. We have been focused on healthcare reform for many years now and have been working diligently to make real progress. SEIU’s change in leadership of the State Council did not change our position on healthcare reform.

SEIU locals in California have remained united all year in support of our principles for healthcare reform and we continue to stand together. We are fighting for our members’ interests and for their families too. Our families want what all Californians want--affordable, real healthcare when we need it.

It’s time to come together to make something work because the status quo is not acceptable and we can’t afford to wait any longer.

Jeanine Meyer Rodriguez
SEIU California State Council

Posted by: Jeanine Meyer Rodriguez at December 19, 2007 09:11 AM

Thanks to Sen. Kuehl for your courageous advocacy for patients and all Californians with SB 840.

Regarding the comments by Jeanine Meyer Rodriguez, I would disagree on a number of counts.

The notion that single payer is not politically viable is frankly an argument that could be made about any social progress. From abolition of slavery to women's suffrage, to the rights of unions to organize to civil rights legislation, there have always been those who argued that real reform was unattainable. They were wrong, thankfully for the enrichment of our democracy and our society.

In fact, the argument that this bill is more politically viable is in itself highly dubious. This bill will almost certainly be rejected by voters next November who will undoubtedly recognize a lemon when they see it. Yet how much money, time and energy will its advocates spend trying to pass substandard reform when they could have devoted as much effort into achieving genuine reform.

We all want "affordable, real healthcare." This is not it.

Nothing in this bill stops insurance companies from continuing to deny care they deem "experimental" or "not medically necessary" or from denying access to specialists or diagnostic tests.

Nothing in this bill restrains the insurance companies from jacking up premiums, deductibles, and co-pays as much as they want.

Without any controls on the price gouging insurance companies, the supposed affordability protections in this bill are a mirage. Millions of California will be forced to buy private insurance under threat of having their wages seized or a lien placed on their property.

With their premiums, deductibles, co-pays, hospital charges, doctor's fees, and other costs continuing to climb, many will face the threat of financial catastrophe due to their forced payments, or simply self-ration care while they still have to pay their premiums.

A report today by the California Employer Benefits Survey noted that the cost of employer premiums in California last year were more than double the inflation rate. That's not encouraging news.

As employers see premiums continue to skyrocket, they will find the much cheaper employer mandate a very attractive alternative. The likely result- they will shift more costs to their employees, slash existing benefits, or dumped coverage entirely relying on the public to subsidize the cost of health coverage for their employees. Wal-Mart will probably be thrilled.

The effect will also be devastating for the public pool, and the public subsidies. The Massachusetts law, on which this is based, is a case in point. The state is already trying to determine how to reduce its subsidy program because of the anticipated huge jump in premiums which they, like this bill, failed to control.

But the bill will be a great gift for the insurance industry, the reason why most of the state's biggest insurers, including Kaiser, Health Net, PacifiCare, Blue Shield, Cigna, and Molina have endorsed it. They'll make hundreds of millions in additional profits, with the public money being funnelled into their bank vaults.

That's not reform, it's a shakedown.

Posted by: Charles Idelson at December 19, 2007 05:56 PM

Single payer ain't happening. No way. No how. Perhaps you can map out a political strategy that can overcome a certain veto by the Governor, a referendum of anything that would ever get out of the Capitol, and then a campaign of hundreds of millions of dollars to crush it at the polls (kinda like the last time CNA tried to put something on the ballot and came up empty times 60).

Stop with the false promises of single payer. The five million Californians without health care can't wait until your political agenda is fulfilled.

Posted by: Steven Maviglio at December 19, 2007 11:35 PM

Single Payer is possible. And, a referendum may be the way to go. It may have failed before but that is before many thousands of Californians began to truly understand the issue (SICKO the movie) because much more information has become available.
I don't count it out and the public is clammering for 'real health care' not real insurance.

Posted by: Merg at December 20, 2007 10:15 AM

Here is why we must support single payer universal health care: It is not morally defensible to allow insurance companies to divert resources needed for care.

What, exactly, do insurance companies DO that adds value to health care? I realize that asking this question is like asking "why do we need car wax?" and the answer may very well be that there are many people employed to do all the work to produce it, transport it, market it, buy, rub it on, rub it off, and fill the landfill with cans. But the analogy is not apt: car wax at least protects the finish on my car for a little while...But health insurance companies??? What a waste.

My son, who has been treated for metastatic cancer over the last 18 months, is daily receiving utterly useless pieces of paper from his insurance company. An entire mountain has been deforested, at least. We, like those of you who also have insurance, try to disregard what these useless pieces of paper represent, in favor of immense gratitude for those caregivers who have made it possible for him to be alive today. But, here is the full meaning: Why are expensive resources being devoted to useless paperwork when there are sick people who need care? Why are we supporting a for-profit insurance system instead of demanding that money for health care be spent on health care?

It's as if we're so buried in the mud we don't even see the color.

It's time to REMOVE the health insurance industry from the health care delivery system, so they no longer block access, waste resources, and enrich shareholders.

What the state SHOULD be sponsoring is the development of a high performance health care system for all. We need electronic medical records, that patients do not fear will be used against them in the future. We need the data held in those records to be evaluated so that outcomes and best practices can be understood, and privacy-protected information about outcomes/practices can be shared. We need cost analysis that yields understanding of what good practices cost, and what they save in terms of future complications. This data is not now even collected, as we live in a for- profit world where this information is beside the point of making money, or if it is collected, it is withheld, and the public has no access.

This effort to produce excellence in health care should rightly be funded by the taxpayers whom it will benefit, so that we can all enjoy a single payer high performance universal health care system.

Posted by: Cheryl at December 20, 2007 12:52 PM

Affordable health care insurance is an oxymoron, as are the oxen who see insurance as a fix for our health care problems.
SB 840 IS THE ANSWER. All else is illusion, smoke and mirrors.
Don't take my word for it. Ask Michael Moore, ask Presidential candidate Dennis Kucinich, ask anyone living in any other industrialized nation in the world. They'd laugh at our health for profit set up is it wasn't so pathetic.
Senator Kuehl's bill IS THE ANSWER! Nothing less will do.

Posted by: Will Tranquilli at December 20, 2007 08:53 PM

I appreciate Senator Kuehl's comments about ABX1 1 but I'm confused by her criticism that the bill has no funding. SB 840 contained no funding either, which is one of the many reasons I voted against it when I was in the Assembly. (And like ABX1 1, SB 840 had virtually no meaningful cost control measures.) Funding ABX1 1 is a triple bank shot and the bill has many gaps, but Schwarzenegger and Nunez deserve to be thanked for going outside the political comfort zone to negotiate a deal. I'm under no illusions that ABX1 1 will become a reality, but it's a realistic start to finding a solution.

Posted by: Joe Nation at December 21, 2007 04:50 AM

Ms. Kuehl feels her way is the only way. Her way is not happening and will not happen with Arnold in office and he will be there for a few more years. So instead of supporting something (many will benefit) she just puts it down. She would rather have nothing, take her support and go home. Well, she will be going home very soon (TERMED OUT). That will be a great day!

Posted by: Jeff at December 24, 2007 04:39 PM

I think putting Senator Kuehl down for her review of ABX1-1 is missing the point. If you have factual issues with her statements - let's hear it! Otherwise, it's like chastising a doctor for diagnosing breast cancer. It's Kuehl's job to uncover confusing and harmful policy so we don't get stuck with it.

For those who suggest that SB-840 is not politically viable, I have two reminders. First that both the State Assembly and the Senate have passed SB-840, the Senate twice. Second that Arnold Schwarzenegger, the governor now championing the fight against greenhouse gas, was previously given credit for the birth of the consumer Hummer, and at one point owned seven of them. Who could have guessed?

In conclusion, I am a huge supporter of SB-840. From my research I feel the savings alone from a non-profit heath coverage system and bulk pharmaceutical bargaining would pay for many of the costs. However, I could also be interested in other policy that would truly move us forward as opposed to leaving us at the mercy of the insurance companies. So show me!

PS - I have not been able to afford medical coverage for years. I save up my pennies and get to the dentist, the chiropractor, the Chinese medic. My research shows that if I was forced to purchase insurance it would divert my meager healthcare dollars from prevention to corporate profits with a "deductible" larger than my annual bill.

Posted by: Rachel Morris at January 10, 2008 11:44 PM

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