Another Blow to ABx1 1: The Leg Analyst Report

by Brian Leubitz [courtesy of Calitics - Front Page]

Legislative Analyst Liz Hill has released a report on ABx1 1 requested by Senator Perata. As is expected, the report offers plenty to both sides of the dispute. To the advocates of the bill, she proffers her agreement that the bill just might have some efficacy:

Sabrina Lockhart, spokeswoman for Schwarzenegger, said that when the legislative analyst office's report is considered in a best-case scenario, it shows the program could work. "The LAO analysis gives strong validation to the financial soundness of the health care reform plan," she said. (SF Chron 1/23/08)

But Ms. Hill giveth, and she taketh away. To those already wavering in the state senate, the results won't help things much.  Ms. Hill says that the program, theoretically, could be sound, but that there's a risky gambit involved in the program. Specifically, if the rate of medical inflation wasn't exactly right, we could end up with a hit to the budget:

Hill said the state cost for subsidized care is based on monthly premiums of $250 per month per person. She said that figure might be unrealistic.

If it turns out the state cannot get premiums of $250 per month - and costs actually end up being closer to $300 - the program could have a shortfall of $1.5 billion by the end of five years.

Annual costs, she said, would increase by $300 million by the fifth year of the program - and $1 billion by the fiscal year ending June 30, 2015 - if supporters have underestimated the increase in medical inflation by just 0.5 percent per year.

And for good measure, she adds that an economic slowdown in the coming year could also hamper the financing of this program. Ahh, fun!
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