As the number of Americans without health insurance hits record highs, the load on state health care is particularly high in California, where 4.9 million to 7.0 million people don't carry health insurance.
have been debating what to do about their state's uninsured population
for years. Several health care expansion bills have been defeated
by ballot measure or gubernatorial veto, but after years of saying
no to single-payer health care proposals, second-term Republican
Gov. Arnold Schwarzenegger said yes to a $12 billion near-universal
health care system overhaul of his own design, which spreads the
financial burden across businesses, the government and individuals.
Schwarzenegger's plan requires businesses with more than 10 employees to pay 4 percent of their payroll into the system if they don't provide health insurance. Hospitals would be taxed at 4 percent of their revenue, doctors at 2 percent of their revenue.
With these funds and federal money, California's Medicaid program,
Medi-Cal, and Healthy Families, which extends that program, would
expand to cover children -- both documented and undocumented --
up to three times the federal poverty threshold (an income of
about $60,000 for a family of four). Medical would also expand
to cover documented adults up to the federal poverty threshold.
But at the center of Schwarzenegger's proposal is an "individual mandate" whereby all Californians would face income tax penalties if they fail to get minimal health insurance coverage to protect against catastrophic health care bills. In return, insurance companies would have to increase spending on health care to 85 percent of revenue from premiums, limit premiums for the elderly, and accept all Californians regardless of their health status.
Massachusetts Institute of Technology professor Jonathan Gruber, asked by the governor's office to analyze the plan, said it would cover about 85 percent of uninsured Californians, with the remainder covered through county programs.
Andrew Wright, the executive director of Health Access California, a consumer advocacy group that favors universal comprehensive health care, called the proposal ambitious and thoughtful.
"The governor's plan was good in that it seeks to remove a lot of the barriers that people now face to getting care," Wright said.
Proponents and critics
California Health and Human Services Secretary Kim Belshe told the NewsHour the plan would "fix California's broken health care system by focusing on prevention and wellness, coverage for all, and affordability," but critics on both sides of the aisle have questioned those pillars.
Adam Thompson, who implemented Maine's Dirigo plan as a staff member in Democratic Gov. John Baldacci's health office, attacked the first pillar -- prevention and wellness. Low income individuals who, under Schwarzenegger's plan, would purchase minimal health care plans are not much better off than the uninsured, he said, because they can't pay down high deductibles.
"That's really insurance in name only. It doesn't guarantee access to preventive care, the primary care," said Thompson, now a policy specialist at the liberal Progressive States Network.
Jean Ross, executive director of the California Budget Project, a nonpartisan public policy research group, called it "health care people can't afford to use."
The governor's office said the plan would seek to make health care affordable by decreasing Californians' taxes by $8.4 billion and collecting funds through the federal Medicaid program. California has one of the lowest spending rates per Medicaid enrollee and, like other large states, is a net donor to Medicaid.
"This proposal -- and any proposal from California -- is not a help-bail-us-out proposal. We've historically under-funded health care. ... We're seeking the same matching funds that the other states get," said Wright.
But the state's Legislative Analyst's Office raised questions about the plan's financing. The LAO said as much as $1.35 billion of federal funding and $1 billion in county funding may not be available, and assumptions that ignored medical care inflation costs could lead to a $400 million shortfall.
And Michael Cannon of the conservative Cato Institute said Schwarzenegger's plan would shift too much of the burden to non-Californians, with the federal government paying three-quarters of California's health care costs.
"The plan would throw a lot more money at a broken system, without doing anything to fix the system," Cannon said.
The plan's prospects
Schwarzenegger's plan doesn't explicitly propose legislation, so it will be up to state legislators to propose bills that would meet the governor's approval.
Schwarzenegger's office said 79 percent of Democrats -- a group with some of his harshest critics -- support the plan, which will be critical given Democrat control of the state Senate and Assembly. The governor also has support from 55 percent of fellow Republicans, his office said.
The Democratic leaders in California's legislature, Assembly Speaker Fabian Nunez and Senate President Pro Tem Don Perata, have promoted their own plans that would require contributions from businesses with as few as one or two employees.
Senate Republicans, meanwhile, have produced Cal CARE, a health care plan built on tax incentives and increased access to preventative care. Insurers such as WellPoint, California's largest Medicaid contractor, also have entered the fray. The company, which opposes the insurer-spending mandate, proposed a national plan on the same day as the governor, urging federal and state governments to loosen criteria for public program coverage.
In his State of the State speech in January, Schwarzenegger called his proposal a beginning. He said, "Everything will be on the table and I want to hear from everyone."
The Senate health committee, lead by Democrat and Schwarzenegger plan skeptic Sen. Sheila Kuehl, has begun public hearings on health care, quickly pointing to questions on affordability and ill-defined limits on premiums.
"At the end of the day," said Wright, "I think that there will be a collaboration, there will be a compromise, that there will be a give-and-take between these various proposals."