Speaker's Plan a Big Step in the Final Push for California Health Care Reform

[courtesy of California Progress Report]

By Michael Russo
Health Care Advocate and Staff Attorney
California Public Interest Research Group (CalPIRG)

Governor Schwarzenegger called 2007 the year of health care reform back in January, but most of the action’s been saved for the last few months. After a summer spent on budget wrangling and with little time to spare before adjournment, the legislature quickly passed a reform bill. But the bill – called AB 8 – didn’t satisfy the Governor. He called a special legislative session on health care reform, vetoed the legislature’s bill, and last month released legislative language on his plan. Then on Tuesday, Assembly Speaker Nunez and Senate President Pro Tem Perata replied with their own proposal for reform.

That’s a lot of back-and-forth, but the legislatures’ proposal puts us very close to a deal.

The Speaker’s plan goes a long way towards meeting the governor in the middle, while still containing costs, expanding coverage, and helping consumers get a fair shake when buying insurance.

When he vetoed AB 8, the Governor cited two specific issues: the bill didn’t attempt to cover all Californians, and he argued that it didn’t spread out the costs of reform fairly enough, and imposed too high a burden on businesses.

The Governor has insisted that any plan has to mandate universal coverage by requiring that all Californians buy insurance, while AB 8 simply required some employees to take up coverage if their employers offered it. The Governor is right to push for universal coverage. But ordering Californians to buy health insurance with money they just don’t have isn’t a real solution. That’s why the mandate needs robust consumer protections and adequate subsidies to work.

Recognizing this reality, legislature’s new proposal does include a mandate – but it couples it with affordability protections that ensure that individuals aren’t forced to spend more than 6.5 percent of their income on health care. This is a common-sense compromise that will expand coverage and make sure individuals don’t have to pay more than their fair share.

The second issue is how to pay for reform. Both the Governor and the legislature required employers either to cover their employees or pay a fee to the sate – but while AB 8 set out a flat level of 7.5 percent of payroll, the Governor proposed a sliding scale that would have capped out at 4 percent for large employers. The legislature listened, and the new proposal now also has a sliding scale to reduce the costs paid by small businesses, and lowers the top rate to 6.5 percent.