The California Senate and Assembly passed historic health care reform legislation Monday. If signed into law, AB 8 (Nunez/Perata), would mark the most significant health care expansion since the passage of Medicare and Medicaid in the 1960s. For the fourth time in five years, the California legislature has distinguished itself from those of most other states by passing major health reform.
Yet even before the debate on AB 8 (Nunez/Perata) was finished in the Assembly, however, Gov. Arnold Schwarzenegger announced — though not unexpectedly — that he would veto the bill and call the Legislature back to work in a “special session’’ to “keep working until we achieve the kind of historic solution that all of us and the people of California want.’’
Speaker Nunez referred to the Governor’s statement on the Assembly bill, disputing the Governor’s characterization of it. “I need to ask the Administration to read the bill….Folks need to read the bill.”
Sen. Don Perata, in his speech presenting AB 8 on the Senate Floor, criticized the lack of specificity in the Governor’s health plan, which has remained the same – a 10-page concept paper — since January.
As part of a special session, Perata insisted that the Governor provide actual legislative language. “We would continue where we left off, not that we would necessarily begin anew… We also recognize that incumbent upon the Governor would be for him to provide us with his legislation… We have been arguing with specific goals and specific legislation with written language, while the Governor has been dealing mainly in concepts. The special session will end the conceptual portion of the debate, and we’ll have real words and real pages to look at. We want to acknowledge that we’ll continue to work with him. While the Governor is within his right…to veto this bill… no one should see this as a failure, but it is really an opportunity for us to dispatch the obligation we have as legislators,’’ Perata said. “We are trying to recapture the seven weeks what we lost” during the budget stalemate.”
Perata stated that the bill was worthy of support without additional chances, stating the the bill was “the best work product available at this time, and without question, this would be the best step forward, and the finest state health care reform package anywhere in the Union.”
SUPPORT AND OPPOSITION
Sen. Sam Aanestad, R-Grass Valley, started the debate by mistakenly stating that there were no organizations in full support of AB 8. While that may have been true in earlier hearings, many groups came on in strong support after amendments were taking adding cost containment and key affordability protections for consumers. As a result, supporters included consumer groups like Health Access California, CALPIRG, and Consumers Union, grassroots groups like ACORN, children’s and senior groups like AARP, the Congress of California Seniors, and the 100% Campaign, and unions including the California Labor Federation, SEIU, AFSCME, CTA and others. Several of these groups appeared with Speaker Nunez and Senate President Perata at a press conference Monday morning.
Aanestad did quote one opponent, the California Nurses Association. The CNA, whose nurses were in town for a conference, had hundreds of red-shirted nurses in the hallway chanting slogans against AB8, and in support of a single-payer plan. They, and other organizations focused on SB 840(Kuehl), called AB 8 a “sell-out bill” and a “bad healthcare deal.” They shared opposition to AB 8 with much of the insurance industry, including Blue Cross of California, which has also been running full-page ads against AB8. Other organizational opponents of AB 8 include some business groups such as the Chamber of Commerce.
Aanestad and other Republican legislators attempted to disparage AB 8 by comparing it with the Massachusetts plan, pointing out that Governor Romney in “running from it.” While AB 8 certainly shares certain features with the Massachusetts plan, one missing provision is glaringly obvious: the absence of any mandate to buy coverage in the individual market. Even for group coverage, AB 8 does not require anyone to have coverage if they can’t afford it. Affordability is explicitly defined in the bill – unlike in Massachusetts. No worker would have to take up coverage if their health care costs – premiums and out-of-pocket costs –would exceed 5 percent of a person’s wages.
Assembly Republican Leader Mike Villines, whose daughter has a “pre-existing condition’’ that would make her uninsurable, complained that AB 8 would not fix that problem. In fact, AB 8 attempts to provide assistance to his daughter. AB8 limits insurers ability to deny because of their health status, developing a standardized questionnaire to prevent insurers from rejecting more than 5% of the market. Otherwise, it requires health plans to write a policy for anyone that applies – called “guaranteed issue.” Those still denied coverage would be eligible for subsidized coverage, with more expansive benefits that currently provided in the current high-risk pool that would be better funded by an assessment on insurers.
Senators speaking in the debate on both sides included Senate President Pro Tem Perata, and Senators Aanestad, Runner, Cox, Kuehl, Machado, and Steinberg. Members of the Assembly include Speaker Nunez, and Assemblymembers Dymally, Huff, Davis , DeVore, Berg, Gaines, Hernandez, Nakanishi, Karnette, Swanson, Garcia, Niello, Mullin, Adams, Arambula, Emerson, De La Torre, Keene , and Villines.
LEGISLATIVE DEBATE AND OPPONENTS
In speaking against AB 8, many Republicans, again, brought up the specter of health care rationing – an argument that is typically paraded during SB 840 single-payer debates. AB 8 (and SB 840) assure that more people have access to care. Whether critics choose to admit it, health care rationing occurs now based on ability to pay, stated responding Democratic legislators.
Opposing legislators also charged that the employer mandate amounted to a “tax’’ on businesses that would drive small employers out of businesses and, according to Assemblyman Rick Keene, cause “one million’’ Californians to be without a job. A recent study, however, by the UC Berkeley Labor Center showed the bill to have minimal, if not positive impact on jobs. Additionally, as Republican Assemblyman Mike Duvall admitted – many businesses that provide coverage spend far more on health coverage. Duvall spends 12.8 percent – about the same as experts have estimated. Sen. Runner admitted that some business people have suggested that, “well, 7.5%, I actually pay more than that, that’s not such a bad deal,” and having to convince them that “once the door opens, it is 10, 15, 18%.”
Senator Cox downplayed the issue, arguing the many of the uninsured don’t want coverage, are undocumented, or are already eligible for public programs but don’t enroll.
Assemblyman Roger Niello and Sen. Runner also pointed out that the uncertainty surrounding the reauthorization of the State Children’s Health Insurance Program (SCHIP) – called Healthy Families in California – could also create holes in the plan as AB8 seeks to expand Healthy Families eligibility while President George Bush is attempting to restrict eligibility.
Assemblyman DeVore argued that health care is not a right, which he argued would mean every Californian had an “infinite draw on the state Treasury,” crowding out all other priorities.
Sen. Sheila Kuehl was one of the two Demoocratic lawmakers who voted against AB 8 in the Senate. Kuehl, who has championed and authored single-payer health care reform in SB 840 for the past five years, said “our failing health care system has often been compared to the Titanic, and I have said in the past that attempts at reform are only attempts to rearrange the deck chairs. Well, AB 8, I admit, is trying to turn the boat… but the Titanic should have faced the iceberg head on. Had it done so, it would have survived, at least long enough to save more of the passengers…” as she then launched into a critique of insurance industry practices.
“I see a number of real flaws in this much-improved bill. I continue to believe that the movement that is building for single-payer will continue to build in 2008, 2009, and 2010, and then, with a new Governor, a perhaps a chance to get a signature for the best solution…, said Kuehl. “I praise those who have been working on [AB 8], they are trying…” she said of her Democratic colleagues who would vote for AB 8, “I understand… we need to have a Democratic plan this year… I understand your vote, but I would like to ask you to stay with me on SB 840, next year… it is not going down to the Governor for a veto, we are continuing to use it as a kind of flag, as an organizing tool, until the day we understand that facing the iceberg head on is the only way we are going to save everybody on the ship.”
Sen. Lou Correa, D-Anaheim, was the other Democratic lawmaker to vote against AB 8 in the Senate, where the bill passed on a 22-17 vote. Correa is the only Democrat who has opposed both major health reform measures this year – AB 8 and SB 840 (Kuehl).
On the Assembly side, the vote was a completely party-line vote, 46-31, with only Democrat Loni Hancock of Berkeley not voting.
DEMOCRATIC LAWMAKERS DEFEND AB 8
Many lawmakers, however, hailed AB 8 as a crucial step in fixing the health care system.
“If some reforms were implemented, we could start to stabilize the system,’’ said Sen. Denise Ducheny, of San Diego. “It doesn’t cover everybody, but if we get more and more folks in, and many businesses are paying more than 7.5 percent [of payroll], maybe we can get more people covered.’’
Senator Steinberg also spoke in favor, as a supporter of single-payer: “Let’s be honest here, it’s the only majority-vote option available to move forward the issue of comprehensive health coverage for uninsured Californians… If you believe that it actually costs money to provide coverage for millions of people who currently don’t have insurance, then together we must find a way to provide the subsidies necessary to make sure everyone has preventative health care.” He hinted at the need to go to the ballot for broader funding.
Assemblyman Dymally also mentioned the obstacle of the 2/3 vote to pass a single-payer system or even the Governor’s plan, and “this is the only ballgame before us today.” He talked about the 10 town halls he visited, and the strong support he saw for AB8, and for the “historic opportunity” he saw in his years. Assemblyman Mike Davis from Los Angeles said he was moved by his constituents, who spoke to him at a Town Hall meeting. “I know this is an important …in South Los Angeles and they [constituents] understand the impact, of corporations… making multimillions and not paying one red cent for people. They deserve to be accountable.’’
Assemblywomen Berg argued that “this would not impede the drive for single-payer” while providing immediate assistance. Assemblyman Hernandez argued that this “would move the ball forward.” He countered that small businesses would want such remark, because today they are “locked out of the market.” Assemblywoman Karnette said in all her travels, in all the diversity of her district, “everyone cares about health care. They want something done.” Assemblyman Swanson talked about his days working in Congress, and seeing debate but no action. “We must move this forward.”
Assemblyman Arambula agreed. “Without good health, it’s hard to enjoy anything else in life. AB8 meets general principles of prevention and early intervention’’ that are the precursors to being healthy, he said.
Assemblyman De La Torre described the problem of a large rate of uninsurance, rising health costs, and closing emergency rooms, and slammed “half-measures” that are often discussed–“Let’s look at the tried and true Washington DC policies of tax breaks…that doesn’t get you where you need to be. We need to get more people covered, we need to protect the people who already have coverage, and we need to strengthen a system that is on the ropes.”
Many lawmakers, including Assembly Speaker Fabian Nunez, said AB 8 was California’s opportunity to provide a model for the federal government to implement health care reform. “We have a broken health care system in California and we must do something to fix it now….This health care package will deliver what the federal government has failed to do: to provide all Americans with affordable health care coverage,’’ Nunez said.
RECOGNIZED NEED TO GET SOMETHING DONE
In spite of the rhetorical disagreements in both chambers, most lawmakers seemed resolved to get some legislation passed this year in special session. As early as Tuesday, Schwarzenegger could veto AB 8 and call a special session, which lawmakers agree is a necessary step.
House leaders said AB 8 should be the basis for negotiations with the governor. Republicans said they wanted a second look at some of the ideas they had introduced, such as Health Savings Accounts, private clinic expansions and tax breaks to encourage reform.
Assemblywoman Bonnie Garcia, while voting “no’’ on AB8, said health care reform should transcend party lines. “You don’t go into the Emergency Room with a broken Democrat leg or a broken Republican nose. It’s up to all of us to sit down and have a dialog,’’ she said.
Perata said lawmakers are in a unique position, in that they have health insurance – unlike 18 percent of Californians who live day to day, afraid to see a doctor or get sick. “Everybody here’s got health insurance paid for by the taxpayers of this state. This, for us, is a theoretical debate. We are not hurting at all. We are benefiting because of the largesse of our constituents. Let’s not be too high and mighty, that if we just did this, this would fix the system. We are in a very luxurious position. Forty of us in this state have had the honor bestowed by our constituents to represent them today. This is about the common good and the commonwealth. It’s not ideology. Not party.”
Speaker Nunez highlighted both the need for health care reform, and also indicated that California can take the lead again on a major issue, like it did last year with global warming. “I believe that today is a historic day for California , to put itself on the map once again, and send a loud and clear message to Washington , DC , that the inaction on the part of the federal government to deliver on health care reform is landing on the shoulders of California .”
AB 8 OVERVIEW
AB 8 would provide coverage to about 3.4 million Californians who currently do not have health insurance – over two-thirds of the uninsured.
Speaker Fabian Nunez said that while AB 8 did not yet cover everyone, as SB 840 (Kuehl) the universal single-payer bill would have, it provided real help to more than 3 million Californians and could be passed this year.
Specifically, AB 8 includes:
The biggest public program coverage expansion since the creation of Medicare and Medicaid 40 years ago. The bill expands Medi-Cal and Healthy Families to include children and parents up to 300%FPL, which is around $60,000 for a family of four, and streamlines the programs so that are easier to get on and stay on.
The establishment of a minimum employer contribution for health care, of the similar import to the creation of a minimum wage 70 years ago. Providing more security the majority of Californians who get employer-based coverage but who are concerned about losing it, the bill sets a standard for a minimum employer contribution to spend 7.5% of payroll on health benefits, either by paying into the purchasing pool or by expending the funds on health insurance or other health benefits.
This statewide purchasing pool would create a new affordable option for employers to cover their workers, initially for employees and dependents of employers that choose to use the purchasing pool. Employers could use the pool to cover their entire workforce, or at least their part-timers. The pool would offer affordable coverage, including an assurance that workers under 300%FPL would get coverage at less than 5% of their income.
New oversight over the insurance industry would especially help individuals and small businesses who don’t have the market power of large group purchasers of coverage.
Reform of the individual insurance market so that coverage is available to anyone who wishes to purchases, by limiting insurers ability to deny people based on “pre-existing conditions,” and providing better funding for coverage for those that are denied, through an assessment on insurers.
A requirement that premium dollars go to patient care, and a 15% limit on the percentage of premium dollars that go to administration, marketing, and profit.
Expanded small group insurance reforms, making coverage more accessible and affordable for employers of 2-100 workers.
A better and more fairly financed health system would be bolstered through shared responsibility from six different funding streams, including required employer and worker contributions, reinvested state savings for public program expansion, an assessment on insurers, and two strategies for brining in California’s fair share from the federal government, to:
Bring in over a billion in new federal matching funds to California ’s health system, by getting matching Medi-Cal funds for these expansions of public programs and employer contributions.
Offer workers new tax savings, by providing the ability to pay premiums, or share-of-premiums, with pre-tax dollars through Section 125 plans, for a savings of 15-40%.
Several cost containment strategies, which, working together, can credibly slow the rate of growth in health costs. The coverage expansions and fair financing provisions could help in reducing the “hidden tax” that results from not having all employer provide coverage to their workers, and for having the uninsured go without cost-saving preventative care. Other stategies include:
Preventing Californians from getting sicker by helping patients to affordably control chronic diseases such as asthma and diabetes.
Requiring public reporting on health care costs, and the quality of services, which would enable health purchasers and consumers to make wiser decisions about their care and the best way to spend their money.
Requiring the adoption of health information technology, which could help avoid duplication and costly errors.
Bulk purchasing of prescription drugs, which would enable the state to use its leverage to drive down prices.
Helping foster the creation of a statewide public insurer from county efforts, allowing this low-overhead, not-for-profit agency to compete for business.
Hanh Kim Quach is the Health Care Policy Coordinator for Health Access California. Health Access works at both the grassroots and senior policy levels to advocate for substantive reforms. It works with a broad coalition of more than 200 member organizations representing communities of color, immigrants, people with disabilities, children, seniors, people of faith, labor, and working families.