Joined by Assembly Speaker Fabian Núñez and a diverse coalition of labor, business, elected officials, and health care professional groups, Governor Schwarzenegger applauded today's successful Assembly vote of AB x1 1, the Health Care Security and Cost Reduction Act.Assembly bill faces tough fight in Senate
By Mike Zapler, MediaNews Sacramento Bureau
Article Launched: 12/17/2007 11:39:56 PM PST
The state Assembly on Monday approved a sweeping health reform plan that could be a model for the nation - if it ever happens.
Gov. Arnold Schwarzenegger and Assembly Speaker Fabian Nunez celebrated the "historic" deal, which culminates nearly a year's worth of negotiating that has dominated the Capitol this year. But the plan is far from reality.
Senate leader Don Perata, D-Oakland, insisted again Monday that he will not allow the Senate to vote on the plan, which would provide insurance to more than two-thirds of the state's uninsured, until after the state's independent legislative analyst examines its impact on the state's budget deficit, now estimated at $14 billion.
The plan also still must be approved by voters because it proposes a number of taxes to fund it, including a requirement on employers to either provide insurance or pay a tax on payroll that would go into a state pool, as well as a hefty cigarette tax. An election campaign is sure to be costly and contentious.
Schwarzenegger and Nunez, however, appeared confident.
"California has taken a giant step forward today on something that many people thought could not be done," Republican Gov. Schwarzenegger told hundreds of people assembled in the Capitol rotunda after the vote.
"This is truly an historic effort," added Nu ez.
The plan would create a new requirement that people carry insurance or potentially face a fine. To help ease that burden,
Lower-income people would be eligible for free or subsidized coverage depending on their income. To pay for the estimated $14.7 billion plan, new taxes would be levied on hospitals and tobacco, and the state would attempt to draw billions in new dollars from the federal government. Altogether it aims to cover more than 70 percent of the roughly 6.6 million million Californians uninsured for all or part of the year. It also requires insurers to accept all customers regardless of pre-existing medical conditions.
But as ambitious as the plan is, it may not make it farther than Monday's 46-31 party-line vote. Perata - echoing a concern voiced by Assembly Republicans - said it would be a mistake to create a new health care program with the state's finances in peril. Perata is especially concerned about existing health programs potentially on the chopping block.
If Perata does not relent soon, it could doom the proposal. Supporters are already running behind schedule to meet a series of deadlines to qualify an initiative for the November ballot. Beyond that, the political dynamics could shift dramatically next year, as the budget dominates the statehouse agenda to the detriment of other issues.
Flanked by labor and business leaders, Schwarzenegger and Nunez hoped to build momentum for the bill that Perata would have difficulty resisting. Among those on hand were Andy Stern, president of the nation's largest union of health-care workers, SEIU, and Steve Burd, chief executive of Safeway.
"I'm not telling Senator Perata how to do his job," Schwarzenegger said, "but I know he will do the right thing."
The governor maintains that the health care plan is "revenue neutral," meaning that it would not affect the state's general fund. But skeptics doubt that claim, given the high and fast-growing cost of health care.
Perhaps the most far-reaching part of the plan is the so-called individual mandate to carry insurance, much like drivers have to carry auto insurance. The goal is to push as many people as possible into the insurance market, lowering costs for everyone. But the governor spent months debating how to make it fair for families already struggling.
They settled on a series of subsidies and tax credits. The state would provide free or heavily subsidized care to people making up to 250 percent of the poverty line - just under $52,000 for a family or four. People in that income bracket who still had to spend more than 5 percent of their income to obtain insurance would be allowed to opt out of the mandate.
In addition, those who earn between 250 percent and 400 percent of the poverty level - between $52,000 and $83,000 for a family of four - would be eligible for a tax credit if the cost of insurance exceeded 5.5 percent of family income.
The state would also consider case-by-case requests for an exemption to the mandate if a person or family was experiencing financial hardship.
If the proposal does make it through the Legislature and on to the ballot, it is sure to trigger a major battle. Although the governor has enlisted significant business backing for the plan, opinion is far from unanimous, and opponents are expected to spend millions to defeat it.
Blue Cross, the state's largest insurer, says the measure would bring steep premium increases to millions of people, mostly young and healthy, who buy insurance in the individual market. The company opposes the provision that would require insurance companies to accept all applicants, regardless of previous health conditions, saying premium rates have skyrocketed in other states that enacted the idea.
A $1.50 to $2 per pack cigarette tax could also draw heavy opposition from tobacco companies. And the pharmaceutical industry is against another provision that would allow the state to buy prescription drugs in bulk.
In the debate leading up to Monday's vote, Assembly Republicans gave a sample of the criticism likely to come, calling the plan a "massive tax increase on California businesses."
"We are in a budget hole," said Assemblyman Roger Niello, R-Sacramento, vice chairman of the budget committee, "And the first rule when you find yourself in a hole is, stop digging."
An estimated 6.6 million people in California - about a fifth of the population - go without health coverage for all or part of the year. The number of chronically uninsured is approximately 5.1 million. The plan would extend insurance to more than 70 percent of the uninsured, supporters said; excluded would be roughly 1 million illegal immigrants, and another 500,000 low-income people who don't enroll in coverage or can't prove they are legal residents.
M.Zapler
Mercury News