Tag Archive: arnold schwarzenegger

California could adopt own health reform plan with individual mandate if PPACA ruled unconstitutional

If the U.S. Supreme Court decides this summer that the Patient Protection and Affordable Care Act’s (PPACA) mandate that all Americans have health coverage or purchase it by 2014 is unconstitutional, California could nevertheless move forward with its own health reform plan including such a mandate.  That’s according to the state’s Health and Human Services Secretary Diana Dooley, per this excerpt from this story appearing in today’s Sacramento Bee:

If the court does rule the federal law unconstitutional, state Health and Human Services Secretary Diana Dooley said California should at least consider enacting its own universal health care legislation, including requiring every Californian to buy insurance.

“I think that we should be committed to making this system more rational than it is today, and improving the health of the people of California,” Dooley said in an interview. “If we ask the insurance plans to take everybody and insure everybody with no screens or pre-existing conditions, then we have to have everybody buying some level of health insurance to meet their responsibility to the system.”

That reciprocity was a core principle of the Health Care Security and Cost Reduction ActIn early 2008, California lawmakers considered but rejected the legislation championed by then-Governor Arnold Schwarzenegger and top legislative leaders.  Like the PPACA, the act was modeled after Massachusetts legislation enacted in 2006 that also served as a prototype for the PPACA and included as a central feature the so-called “individual mandate” requiring adults to have some form of public or private health insurance or managed health care plan.  In turn, insurers and health plans would abandon medical underwriting and accept all applicants regardless of medical history, thereby making coverage accessible to more people.  Other key policy goals of the mandate are to alleviate “cost shifting” in which those who have coverage end up paying for health care costs of those without coverage through higher premiums and to reduce the threat of adverse selection that can rapidly render payers insolvent.

It remains to be seen whether California would move forward with its own reform plan if the PPACA fails to survive judicial scrutiny by the nation’s highest court.  Increasing the probability is the view among the Golden State’s health care industry leaders that health care reform has achieved critical mass and will move forward regardless of what happens at the federal level.

Also generating momentum for reform is the state’s already partially spent federally funded investment in setting up the California Health Benefit Exchange under the PPACA to create a marketplace to help individuals and small employers aggregate their purchasing power.  Then there are the state’s demographics.  California is the nation’s most populous state and has more people in the individual health insurance market than other states — about eight percent of those 65 and younger versus about five percent in the nation as a whole.  It also has a relatively large percentage of medically uninsured residents, whose numbers have increased as many people lost employer-paid coverage in the economic downturn.

The recession was just getting underway when the Health Care Security and Cost Reduction Act was before the California Legislature, prompting then-state Legislative Analyst Elizabeth Hill to question if the state could afford its tax credits, subsidies and other costs.  Four years later, the state’s finances remain under siege amid ongoing deep budget deficits. Selling the individual mandate could also prove politically challenging as it did in 2008, when California health care payers were divided over it and business and consumer interests nearly uniformly opposed.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

California single payer rides again — but faces uncertainty

California is once again mulling whether to effectively deprivatize its health insurance market and put in place a Canadian-style publicly funded insurance program.  SB 810 would create the California Healthcare Agency that like Canada’s Medicare program would pay all medical bills out of tax levies.  The idea is to create a market monopsony that would shift bargaining power from providers of medical coverage to purchasers — in this case making the state the 800-pound gorilla purchaser.

The legislation is a reintroduction of a bill of the same number and author that died in final days of the previous legislative session last year.  Even had the bill had passed out of the Legislature, it faced near certain death at the hands of then-Governor Arnold Schwarzenegger, a Republican who vetoed previous single payer bills that reached his desk.  Schwarzenegger instead preferred reform that aggregates purchasing power — particularly among individuals and small employers that currently have little to none — through purchasing exchanges.  That approach was pioneered in Massachusetts and ultimately adopted as the national standard in the Patient Protection and Affordable Care Act (PPACA).  The PPACA establishes the American Health Benefit Exchanges in the states; the exchanges must be ready to begin operations by January 1, 2014.

SB 810 would require California’s health and human services secretary to seek a waiver from the exchange requirement as well as the PPACA’s standards for the inclusion of “qualified health plans” in the exchanges under a PPACA provision allowing for waivers for innovative state health plans that offer coverage beginning January 1, 2017.  So even if SB 810 becomes law, California would have three years of experience with the PPACA’s benefit exchange demand aggregation approach.  While the exchanges in theory should exert enhanced market forces to hold health insurance and managed care plan premiums in check, it remains unclear as to whether they will meaningfully accomplish that goal.  As payers continue to respond to rapidly rising medical treatment costs for their insureds and members, the state exchanges could end up being nothing more than large pass through mechanisms for those higher costs.  That situation would bolster single payer advocates, who apparently hope to have their preferred alternative primed and ready to go in 2017.  Or possibly at the same time the benefit exchanges begin operations.  President Obama said on Monday, Feb. 28 he supports legislation that would amend the PPACA to allow states to start their own programs sooner then 2017 provided their plans provide the same extent and quality of coverage as under the PPACA and don’t add to the federal deficit.

Will SB 810 unlike its predecessors actually be signed into law?  During Schwarzenegger’s administration, the chances were slim to none.  Under recently installed veteran democratic Gov. Jerry Brown, it’s more likely but nevertheless still unclear.  Democrats have a solid majority in the state Legislature and with the exception of 2010 have been willing to give their blessings to single payer.  Whether Brown would be inclined to sign SB 810 into law will probably be largely influenced by the extent of voter outrage at having to pay more for less coverage as insurers raise premiums and shift more risk to their customers.  With California’s economy still in bad shape, it won’t take much to spark that anger.  Brown might also be convinced to sign the measure if it were presented to him as a backup plan in case the benefit exchange doesn’t hold down premium increases.

However, even if Brown were to support SB 810 in concept, there’s a political complication.  In order to keep his campaign pledge to allow voters to ratify tax levies, an appropriation measure to fund it (drafted as a companion measure to previous single payer proposals) would have to go before the electorate.  Minority Republicans in the Legislature wouldn’t likely provide the necessary supermajority vote to place a tax measure on the ballot.  The same issue currently threatens to stymie Brown’s budget proposal calling for extending temporary tax increases to balance the state’s deficit-plagued budget.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

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