Schwarzenegger, Nunez Submit Ballot Initiative For Health Care Reform Proposal

Main Category: Health Insurance / Medical Insurance
Also Included In: Public Health
Article Date: 03 Jan 2008 - 11:00 PDT

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California Gov. Arnold Schwarzenegger (R) and state Assembly Speaker Fabian Nunez (D) on Friday submitted to the state attorney general a proposed ballot initiative for the November 2008 elections that would provide the funding mechanism and other changes necessary to enact their plan to overhaul the state's health care system, the Los Angeles Times reports. The submission "sets the stage for what is expected to be a costly and contentious battle pitting the two state leaders and their allies against some powerful opponents," according to the Times (Rothfeld, Los Angeles Times, 12/29/07).

The proposal, approved by the California Assembly last month, would require most state residents to obtain health coverage. Under the bill, residents with incomes up to 250% of the federal poverty level would receive state subsidies for coverage, and residents with incomes up to 400% of the poverty level would receive tax credits to ensure that health care premium costs do not exceed 5.5% of their incomes. Insurers would be prohibited from denying coverage to residents because of pre-existing medical conditions (Kaiser Daily Health Policy Report, 12/21/07).

The ballot initiative submitted by Schwarzenegger and Nunez would ask voters to approve about $9 billion in fees and taxes to partially fund the $14 billion plan. The remaining funding would come from the federal government, consumer premiums and copayments (Chorneau, San Francisco Chronicle, 12/29/07). The initiative would nearly double the state tax on cigarettes to $1.75 per pack, from 87 cents per pack, in mid-2009. The initiative also includes an employer requirement that ranges from 1% to 6.5% of their payrolls, depending on the level of payroll. Funds raised by this fee would go into a new California Health Care Trust Fund to assist state residents who find insurance unaffordable. The initiative specifies that funds directed to the health care trust fund only could be used for the specified purpose.

In addition, the initiative would:

• Specify the process by which programs would be suspended if the state encounters insufficient funding;
  
  
• Levy new fees on hospitals; and
  
  
• Approve a $25 million loan from the state's general fund to provide funding to families with children who will be dropped from city or county health care programs during the transition to the state program (Los Angeles Times, 12/29/07).

Process
Submitting the measure to the attorney general "is the first step" in qualifying it for the ballot, according to the Chronicle. The attorney general has seven weeks to review the initiative, assign it a formal title and write a summary that can be distributed to voters. Schwarzenegger and Nunez likely will need signatures from more than one million registered voters.

In addition to approval of the ballot measure, supporters of the health care proposal need to pass legislation (AB1X) that would make changes to the state and local government to allow the new health care system to operate. State Senate Pro Tempore Don Perata (D) has delayed a vote on the bill until mid-January, after a financial analysis is completed. If the bill is amended in a "substantial way, a new initiative would have to be drafted and the attorney general would have to begin his review again -- costing backers of the plan precious time," according to the Chronicle. The Chronicle reports that for supporters of the reform proposal, "time is running short to qualify the measure for the ballot and then effectively campaign for its passage" (San Francisco Chronicle, 12/29/07).

Problems With ERISA
The Christian Science Monitor on Monday examined how California leaders "are pushing forward with a health care reform effort ... despite an ominous legal ruling last week" that found that a San Francisco health care program violated the 1974 Employee Retirement Income Security Act by requiring employers to spend a specified amount of money on health programs for their employees. ERISA prevents state and local governments from meddling with employer-provided benefits. The ruling "reiterates the almost Sisyphean nature of health care reform at anything but the national level," and the submission of the ballot initiative by Schwarzenegger and Nunez "signal[s] they are still willing to try to push the boulder back up the hill," the Monitor reports (Arnoldy, Christian Science Monitor, 12/31/07).

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.