Monday, March 28th, 2005

BLAMING THE INDIVIDUAL: Proposals That Don’t Expand Health Coverage

  • “Individual mandate” proposal would shift burden of health coverage
  • Other proposals of concern include Health Savings Accounts, high-deductible plans
  • Action needed against anti-consumer proposals

As described in past updates, the start of the new legislative session brings several proposals to expand health coverage, from building on the Healthy Families program to provide coverage to all California children, to a ambitious proposal for universal health coverage. As the state’s health care consumer advocacy coalition, Health Access California is supporting multiple proposals to increase access to health care and coverage, including multiple bills in the legislature, that take us closer to the goal of quality, affordable health care for all.

Anti-Consumer Proposals: However, consumer groups are troubled by a few proposals that are also circulating, that could actually harm the ongoing fight to expand coverage. Many of these anti-consumer proposals seek to shift more of the cost and burden of health care and coverage onto individual consumers, often through the individual insurance market.

In contrast, consumer groups have supported multiple proposals that work to pool people together to share risk, either through the worksite, or through public insurance programs. This is the most effective way to expand coverage, as most Californias already get coverage this way: 19 million get coverage through an employer, and another 10 million are covered through public insurance programs like Medicare, Medi-Cal and Healthy Families.

Two of the bills of concerns are part of a pacakge promoted by Assemblymembers Nation and Richman:

  • Individual Mandate: AB 1670 (Nation/Richman). As the flagship bill of an eight-bill package on health issues, Assemblymembers Nation and Richman have introduced AB1670 which requires every Californian to obtain and maintain health coverage at all times. Health Access California opposes this “individual mandate” which places the entire responsibility on the individual. This individual mandate proposal is very different from SB840 (Kuehl), which creates a system of social insurance funded out of contributions by employers and individuals similar to Medicare. It is also very different than SB2 and Proposition 72 which built on the employer-based system of pooling risk and which included contributions by both employers and employees. Instead AB1670 individualizes the risk, placing the burden on each Californian.

AB1670 has other troubling provisions:

  • AB1670 requires minimum coverage with $5,000 per person deductible. Such coverage makes care unaffordable for most Californians. Numerous studies have shown that even at much lower deductibles of $1,000 or $2,500, people avoid needed care–and face serious financial repercussions. Health Access opposes the existence of such coverage, much less mandating it.
  • AB1670 creates an “essential benefits” package but does not specify what that means. Which consumer protections will be eiminated?
  • AB1670 requires coverage of “preventative care”: that means pap smears and childhood immunizations. “Preventive care” does not usually include care for asthma, diabetes, high blood pressure or other chronic conditions, much less broken arms or heart attacks. The $5,000 per person deductible would apply for asthma, diabetes, broken legs, and heart attacks.
  • AB1670 subsidizes low-wage employers but not low-wage employees. AB1670 as introduced provides subsidies for employers with fewer than 50 employees if most of the employees earn less than 200% of poverty. BUT AB1670 and its companion measure do nothing to subsidize the millions of low-wage workers who are not eligible for Medi-Cal. Medi-Cal generally does not cover adults between ages 18 and 65 no matter how low their income unless they have severe health needs or children under 18 at home. Even then, parents are only covered up to 100% of poverty ($13,000 a year for a family of three).
  • AB1670 requires proof of coverage when income tax is paid, even though many Californians pay no income tax and are exempt from filing requirements. Failure to provide accurate tax information is a felony.
  • AB1670 is constitutionally dubious: so-called mandatory auto insurance is actually contingent on auto registration and driver’s license, both privileges granted through the police power of government to regulate commerce. It is unclear what would be the privilege that would allow “mandatory” health insurance.
  • AB1670 may not reduce the number of uninsured: precisely the same low-income workers who have difficulty affording health coverage are the people who often go to work on the bus or drive to work without auto insurance because they can’t afford car insurance any more than they can afford health insurance. A $5,000 per person deductible does not provide access to affordable care for a family of three making $50,000, much less a family of three making $15,000.

AB1670 has some provisions that might be worthy of support if adequate detail were provided. These include community rating of health insurance as well as creating additional insurance pools at the county or regional level. Unfortunately, AB1670 as introduced provides very little additional detail about these extremely complicated areas of law. While some versions of community rating and insurance pools are worthy of support, some are not. Some destabilize the risk pool, others allow the equivalent of redlining. The measure in print is somewhat different than the materials that have been provided previously by Assemblymembers Nation and Richman.

Simplification with Privacy Violation: AB1671 (Nation/Richman). The bill states that “existing Medi-Cal and Healthy Families programs’ income and resource methodologies and other eligibility rules and application, enrollment, retention, and seamless bridging procedures shall, to the maximum extent permitted by federal law, be simplified, streamlined, and coordinated”. Unfortunately, the legislation does not specify how this laudable goal is to be accomplished. As consumer advocates who have struggled long and hard to streamline and simplify Medi-Cal and Healthy Families can attest, the gap between that goal and the specifics of accomplishing it through statutory language is great. Again, without the specifics, we can only determine that we support the goal, not the proposal.

Far more troubling, AB1671 allows DHS to “use any state government data bases to identify and locate individuals that may be eligible for, but not enrolled in, health care programs”. This innocuous sentence conceals wholesale violations of privacy without consent. Eligibility for public programs is contingent on income, assets, immigration status and other qualifying characteristics. Which state data bases could be searched? Tax records? Records of property? Other records of assets? Failure to obtain a driver’s license due to unclear immigration status? School lunch records? WIC? For these reasons, Health Access California opposes AB1671 unless amended to eliminate this massive violation of privacy.

Beyond the bills proposed by Assemblymembers Nation and Richman, other measures opposed by Health Access California include:

  • High Deductible Insurance: AB445 (Walters) expressly permits high deductible health insurance. Health Access opposes because high out of pocket costs deter appropriate care (as well as unneeded care). Author indicates measure will not move forward.
  • Tax Credits: AB995 (Cancimilla) provides tax credits of 50% of the cost of coverage for small employers offering coverage to employees (but not for dependents). AB995 does not distinguish among employers in terms of ability to pay: some can afford coverage, others cannot. AB995 helps businesses whether they have provided coverage in the past or not.
  • Health Savings Accounts: SB195 (Maldonado) conforms California tax to federal law with respect to Health Savings Accounts (HSAs). Health Savings Accounts, like other high deductible products, deter appropriate care and penalize those with chronic conditions and those with acute health care needs as well as women, children and persons over 50. High deductible products also futher erode the risk pool in which risk is shared across broad populations.

More information about all these proposals, and when they will be heard in legislative committees, will be forthcoming.

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