California Health Care Proposal Compromise Appears Unlikely
12 09 07 - 19:51
A compromise on a health care reform plan in California appears unlikely as the state Legislature prepares to adjourn on Sept. 14, setting the stage for a special legislative session and potentially a statewide ballot measure to decide how to fund the proposal, the New York Times reports.
Steven Maviglio, spokesperson for Assembly Speaker Fabian Núñez (D), said both houses are expected to pass state Democrats' health care legislation early this week. California Gov. Arnold Schwarzenegger (R) is expected to veto the bill and call a special legislative session to continue the debate (Sack, New York Times, 9/9).
Before a ballot measure is drafted, lawmakers and Schwarzenegger must resolve several differences, including a proposal by the governor that would require all residents to obtain health insurance. Democrats say that an insurance mandate would be costly for moderate-income residents who would not qualify for state subsidies.
In addition, Democrats and Schwarzenegger differ on how much employers should contribute to workers' health care. The Democrats' plan would require employers to spend 7.5% of payroll on health care for employees or pay into a state health insurance pool, while Schwarzenegger's plan would require a 4% payroll contribution from employers.
Mark DiCamillo, director of the California Field Poll, said voters are more likely to approve a plan that narrowly targets a population rather than a plan calling for broad tax increases, such as a sales tax, that affect everyone. He added, "The more people that are included, the higher levels of opposition because it affects their own pocketbook" (Zapler, San Jose Mercury News, 9/8).
California Hospital Association
In related news, the California Hospital Association's board last week agreed to a provision in Gov. Arnold Schwarzenegger's (R) health care reform plan that would require hospitals to contribute 4% of revenue toward expanding health care coverage (Rau, Los Angeles Times, 9/7). The agreement comes after a consultant commissioned by CHA reported that the reworked agreement would increase revenue for 282 hospitals, while cutting into revenue for 88 facilities (Ainsworth, San Diego Union-Tribune, 9/7).
CHA had opposed the governor's proposed mandatory contributions when his plan was unveiled in January, but the board agreed to a deal after the administration made several concessions (Los Angeles Times, 9/7). Under the agreement, the 4% contribution would permanently be capped at 4%. Hospitals' contributions would generate $1.7 billion annually and an additional $1.7 billion in Medi-Cal matching funds from the federal government. Medi-Cal is the state's version of Medicaid, and reimbursement rates for the program are the lowest in the nation.
The revenue first would be used to increase Medi-Cal reimbursements to hospitals and managed care payments to the maximum allowed under federal law, and the remaining money would be earmarked to expand coverage to the uninsured. The funds would be placed in a hospital trust account separate from the state's general fund. The agreement also would guarantee annual Medi-Cal rate increases and continue -- and increase annually -- the state's current general fund expenditures to hospitals (Rojas, Sacramento Bee, 9/7).
According to the Los Angeles Times, those provisions, in conjunction with the 4% cap on hospital contributions agreement, could result in California having to increase health care spending if the federal government were to reduce Medicare physician payments (Los Angeles Times, 9/7).
As part of the deal, hospitals also agreed to no longer practice "balanced billing," in which patients treated out of network are billed directly when a dispute arises between insurers and providers. The agreement would end after five years unless the Legislature and governor reauthorize it. Terms of the agreement also would be subject to federal approval (Sacramento Bee, 9/7).
Republicans
Republicans remain opposed to any sort of tax or fee increases, so if Democrats and Schwarzenegger can agree on the overall structure of the health care proposal, the financing might be put to voters in a ballot initiative (Herdt, Ventura County Star, 9/7). The hospital association did not agree to fund the ballot initiative, but CHA President C. Duane Dauner said the group "will be a partner in that coalition" (Los Angeles Times, 9/7).
State Sen. George Runner (R) said Republican lawmakers would support the hospital contributions only if they were "within the context of what the total (health care reform) plan is." He added that Republicans would not support the mandate if some of the revenue paid for health care for undocumented immigrants (Los Angeles Times, 9/7).
Democrats
Dauner said amendments added to Democrats' legislation this week that would establish an independent commission to collect health care information from all providers, including hospitals, are "problematic" for hospitals. He added that the bill "creates a new bureaucracy" by giving "broad powers and authority to a new commission, and they can set fees on the people that they require to provide the data" (Sacramento Bee, 9/7).
National Implications
The inability of California lawmakers and Schwarzenegger to reach agreement on a proposal that would require all state residents to obtain health insurance could "arrest the national momentum behind health care reform," the New York Times reports. According to the New York Times, "although there is consensus on the issue's urgency, there is no agreement on either the breadth or the financing of a health plan." In addition, the state Legislature plans to adjourn next week, "raising the possibility of a special session of the Legislature and a statewide ballot measure," the New York Times reports.
Schwarzenegger has proposed that he and the state Legislature "enact the outlines of a plan but leave the financing ... to a ballot initiative," but state voters "may not be eager to vote for the substantial tax increases needed to pay for universal coverage," according to the New York Times. Robert Ross, president of the California Endowment, said, "Failure to get something done here will have the effect of throwing a wet blanket on the national debate" on health care reform (New York Times, 9/9).
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