California Lawmakers Begin Debate On California Gov. Schwarzenegger's Health Care Proposal

Main Category: Health Insurance / Medical Insurance
Article Date: 05 Nov 2007 - 6:00 PDT

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The California Assembly Health Committee on Wednesday held the first legislative hearing on Gov. Arnold Schwarzenegger's (R) health care proposal, while state Health and Human Services Agency Secretary Kim Belshe outlined the governor's plan and responded to criticism from Republican and Democratic lawmakers, the San Jose Mercury News reports (Zapler, San Jose Mercury News, 11/1).

Last month, after vetoing a health care bill (AB 8) by state Assembly Speaker Fabian Nunez (D) and state Senate President Pro Tempore Don Perata (D), Schwarzenegger released a revised version of his proposal. The revised proposal would require all state residents to obtain health coverage and would provide income-based subsidies to low- and moderate-income Californians.

Schwarzenegger's plan also calls for fully subsidized health care coverage for families with incomes up to 150% of the federal poverty level and partial subsidies for families with incomes between 150% and 250% of the poverty level, with families' contributions to premiums capped at 5% of income. The plan would provide tax credits for families with incomes between 250% and 350% of the poverty level as a way to limit their contributions to insurance premiums to 5% of their incomes (Herdt, Ventura County Star, 11/1).

Schwarzenegger seeks to win approval of the basics of his plan on a simple majority vote in the Legislature and then draft a ballot measure asking voters to approve a funding mechanism (Kurtzman, AP/San Francisco Chronicle, 10/31).

Criticism
Belshe told the committee that about 80% of the state's uninsured population would qualify for some type of public assistance under the plan. However, Democrats argued that the plan does not adequately control health care costs nor does it define what benefits health plans must provide. Schwarzenegger's plan would require the secretary of health and human services to establish mandatory benefits through the state rulemaking process (San Jose Mercury News, 11/1).

Democrats and Schwarzenegger also disagree on employer contributions. Under the governor's plan, employers would contribute between 0% and 4% of payroll toward health coverage. Contributions would be determined on a sliding scale. Democrats continue to push for contributions of at least 7.5%, saying that employers who currently provide coverage pay more than 13% of payroll on average.

Meanwhile, Republican lawmakers told Belshe that the governor's proposed mandatory employer contributions could be overturned in court. State Assembly member Alan Nakanishi (R) cited a case in which a similar employer mandate in Maryland was overturned for violating federal law. However, Belshe noted that Schwarzenegger's mandate could withstand a legal challenge because it "does not expressly require employers to provide coverage" and provides the option of contributing to a state-run insurance pool (Rojas, Sacramento Bee, 11/1).

Meanwhile, in a letter released during the hearing, Los Angeles Mayor Antonio Villaraigosa (D) and San Francisco Mayor Gavin Newsom (D) criticized Schwarzenegger's proposal for not guaranteeing that coverage would be affordable for middle-income residents (AP/San Francisco Chronicle, 10/31).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation© 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.