First Take on the Perata Plan

Health Access Update
December 12th, 2006

SENATE PRESIDENT PERATA UNVEILS HEALTH CARE PLAN COMPONENTS

  • “Pay-or-play” model, with individual mandate, expansion of Medi-Cal & Healthy Families
  • Goal to workers & their families, 2/3rds of uninsured; Workability issues raised

Senate President Pro Tem Don Perata on Tuesday unveiled a broad outline of his health care proposal, which he estimates may cover up to 2/3rds of uninsured Californians. His proposal requires employers and employees to contribute to the financial cost, while also expanding some public programs. His sponsorship of the plan signified the Senate’s priority that this will be “our primary issue in the upcoming year.”

You may also hear audio from his press conference.

Perata’s proposal is limited to concepts, but provides the most detail on what leaders may be discussing in health reform next year. On the first day of session last week, Assembly leaders introduced several placeholder bills stating their intent to provide affordable coverage to Californians, but few details have been released. With Senator Sheila Kuehl’s universal single-payer health care proposal, there looks to be over a half-dozen bills for major health reform. Gov. Arnold Schwarzenegger is set to release his plan to add to the mix during his State of the State Address on January 9th.

Perata spoke about “shared responsibility” on the part of both businesses and workers. Immediate reaction included concerns voiced by both business and consumer advocates. Perata’s not surprised. “Once fleshed out, I’m fully confident that there will be something for everyone to oppose,” he said.

Reporters and bloggers at Senate President Perata’s press conference summarized the tenor of the conversation, including:
* Clea Benson at Sacramento Bee
* John Myers at KQED
* Tom Chorneau at SF Chronicle

* Frank Russo at California Progress Report
* Donald Lathbury at California Majority Report

Few details were revealed about how much patients would have to pay, who would be impacted, and how and and whether the plan would work.

Health Access is reviewing the proposal to provide an analysis in the next several days. While there are components that consumer, health and community groups have supported, such as serious efforts to protect on-the-job coverage, and the expansion of public insurance programs. At the same time, there are other components that may not be workable or desirable, such as an individual mandate enforced through the tax code; insurance reforms and rules to govern some but not all products in the market; the exclusion of some California populations; and the lack of guidelines without regard to affordability for consumers.

Here is a broad outline as presented by the Senator:

Who is included?
The proposal focuses on working Californians and their families. It would also expand public programs, using federal matching dollars, to cover more (but not all) children and parents up to 300% of the federal poverty level ($49,800 for a family of 3). For example, Perata estimates their plan would cover 58,000 out of the 316,000 uninsured children who currently aren’t eligible for Healthy Families or Medi-Cal.

Where does the money come from?
Perata estimates his plan would cost between $5 billion to $7 billion annually – all state dollars (before federal match) but none out of the general fund. Employers, employees and the federal government should all be kicking in enough to pay the tab. As for specifics – how much each population is supposed to pay – that hasn’t been determined that, but Perata has asked the California HealthCare Foundation for technical assistance.

Any exemptions?
At this point, anyone who is working would be required to pay into the system – businesses and employees alike. Perata said he is modeling his plan after State Disability Insurance (SDI). To that extent, a buy-in would be voluntary for the self-employed.

How would it work for employers?
Perata’s “pay or play” plan would set a minimum requirement for what employers should spend on health coverage. If they don’t, they’d be required to pay an equivalent amount into a Trust Fund. Money in the Trust Fund would buy health coverage for Californians through a “Connector,’’ run by the Managed Risk Medical Insurance Board. MRMIP already administers Healthy Families, Access for Infant Mothers and the program for the medically uninsurable (people with pre-existing conditions).

How would it work for workers?
The “connector” would be expected to set coverage standards and negotiate rates (like CalPERS) using economies of scale. Small employers and individuals that wanted to buy insurance through “the Connector” would be permitted. Employers could choose from three types of plans, and contracting health plans

More information and analysis to come on this and the many other proposals being crafted.

Health Access California promotes quality, affordable health care for all Californians.

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