Little Hoover takes on big issue…

Monday, November 13th, 2006

* Little Hoover Commission studies strategies to address state’s health needs
* Report from Sacramento hearing, field visit to Los Angeles hospital

The state’s Little Hoover Commission, a quasi-governmental, bipartisan oversight commission that makes recommendations to improve efficiency in state government, has recently turned its focus to health care.

While they don’t have an specific authority to implement any recommendations, they have had impact on debates on government reorganizations to specific issues. As Gov. Arnold Schwarzenegger announces his intention to make 2007 the “Year of Health Reform” and advocates plot a 2007-08 expansion, the Commission’s recommendations — expected to be released next year — will be timely.

In the past month, the panel has toured public hospitals and community clinics in Contra Costa County and Los Angeles County. The panel also held its first public hearing on the matter to give the seven citizen members of the 11-member commission a better foundation on problems plaguing the health care system. Of particular concern, noted Chairman Michael Alpert, the fact that public coffers will contribute $73 billion in health programs, yet six million Californians remain uninsured. (Counting private insurance dollars, the number spent toward health care in California is actually $180 billion).

To see documents the commission has been collecting for its health care project, visit the Little Hoover website:


The Little Hoover Commission has not traditionally followed health care issues, and so their early explorations have revisited issues that have been discussed in the recent past. Even though the commission is intended to be bi-partisan (six Republicans, four Democrats and one insurance executive who is a “declined to state”), the nature of the conversation has focused more on cost-cutting measures, rather than on expanding access or dealing with other reforms.

The Commission has not produced any recommendations yet, but Commissioners have been asking questions, at hearings and field visits. This report merely details the types of questions they are asking, as they explore health issues.

INDIVIDUAL MANDATE: For instance, Commissioner Daniel Hancock, a Democrat from San Ramon and father of young adults, noted at the hearing that “some of them (young adults) want to be uninsured. They’re 23 years old. They feel bullet proof.’’

He asked whether the state should impose an “individual mandate’’ that would require every person to have health insurance, just as every driver is required to have health insurance.
Massachusetts , others noted, just imposed that requirement as part of its larger near-universal coverage package.

While it is true that young adults under 30 are the largest demographic of uninsured, it is not because they don’t want to be insured. These young adults are also most likely to be in low-wage jobs where health benefits are unavailable, or not eligible for public programs because they are childless, and they can ill afford to spend meager incomes on increasingly expensive health care products.
Consumer advocates in California have been wary of the “individual mandate’’ concept successfully opposing bills in the past two years – that would have fined or criminalized people for not having insurance – even if they were denied coverage because of pre-existing conditions, or even if it is unaffordable. Unlike Massachusetts , California also does not have laws requiring insurers to sell policies to people on the individual market – meaning consumers could find it nearly impossible to obtain insurance if they’ve ever experienced seemingly innocuous ailments such as ear infections, bladder infections or more than three doctor visits in the last year. And even they can, it might not be affordable – a dictate under Massachusetts ’ new laws in order for the individual mandate to be imposed.
MANDATORY MANAGED CARE: Commissioners grappled with the state’s growing spending on health care for those who need it most. It has been cited as a problem that Medi-Cal has grown about 8.5 percent per year, outpacing the state general fund’s growth of 6 percent per year. It was not mentioned that Medi-Cal costs are growing at a slower rate than health care in general, and the private health insurance in particular.

Commisioner Loren Kaye, a Republican from Sacramento , questioned why the state did not shift fee-for-service Medi-Cal recipients, which include the disabled and seniors. But the population being cared for under the fee-for-service program has higher health care needs. Gov. Arnold Schwarzenegger attempted to do this in 2003, his first year in office, but the Legislature and advocates fought the proposal and defeated it. Seniors and the disabled may voluntarily choose to be in managed care, but are not required.

Stan Rosenstein, head of the state’s Medi-Cal said this population is generally fearful that HMOs would restrict services to save money, or they would disrupt their care by switching doctors, who have not cared for their complicated health conditions.

SCALING BACK MEDICAID: Commissioner Stanley Zax, who is president of Zenith National Insurance, which provides workers’ compensation insurance, hammered away on the issue of waste, fraud and abuse and whether the state was doing enough to prevent money from falling into undeserving hands. Medi-Cal is among the only programs in the nation that audits itself and has an error rate of about 8 percent, reported Rosenstein.

With relatively little savings to be harnessed there, Zax began another inquiry – saving money by restricting services. California ’s Medi-Cal offers the richest package of “optional benefits”–even though those items considered “optional” include prescription drugs, prosthetics, orthotics and dental services for adults. Medi-Cal also provides these benefits to populations not required by federal.

In spite of its richer benefits and higher eligility, Medi-Cal is also one of the most efficient systems in the nation, insuring more people at less cost per person than any other state program and obtaining the best prices for prescription drugs, second only to the VA system, according to Rosenstein.

The most unconventional idea aired was the suggestion by Hancock, who is a Democrat. Hancock suggested that Medi-Cal patients be “timed out’’ of their entitlement benefits, as welfare recipients were put on a five-year lifetime limit during the national welfare overhaul in 1996.

One response was that about 2 million of Medi-Cal enrollees are seniors or people with disabilities – on respirators, wheelchairs or other devices that help them live day to day. Stan Rosenstein, who runs the state’s Medi-Cal program, said the reason Medi-Cal (Medicaid) was exempted from the welfare reform laws of a decade ago was because many of the recipients “can’t work and can’t be insured by anyone.’’

Additionally, he noted there are large numbers of people joining Medi-Cal is because they can’t get coverage at work. “If people have a choice, they don’t want to be on Medi-Cal. It’s not a glamour program.’’ Also important to point out is that half of Medi-Cal’s 6.5 recipients are children and children are required to be in school and are barred by federal laws from working, so that they can earn money to pay or qualify for health coverage.


At a tour of Los Angeles County-USC hospital in southern California, Commissioners Mitch Mitchell and Hancock were able to witness innovations that keep the second-busiest emergency room in the nation running. Patients are diverted daily. The Intensive Care Unit is running at 107 percent capacity annually.

The county, through its Public Private Partnership, is able to provide access to preventive care through a network of about 200 doctors in the community for people with incomes less than 200 percent of poverty ($33,200 for a family for three). Through the hospital’s Camino de Salud Network, it makes sure that “frequent users” of the hospital emergency room receive extra preventive and chronic maintenance attention. COPE Health Solutions also supplements county services by providing a team of about 40 case managers who are responsible for about 30 patients apiece. These case managers make follow up calls to make sure that patients understand doctor’s instructions and take their medications.

In spite of the Los Angeles County’s innovations, the majority of residents still aren’t able to get adequate chronic disease maintenance because of gaps in the state and federal financing system.

Mitchell drew some conclusions from the visit, including that patients needed “catastrophic coverage.” For consumer advocates, “catastrophic coverage” would not prevent medical debt, and would serve as a perverse disincentive for patients to avoid preventive care that prevents visits to the ER, and instead encouraged people to wait until illnesses were “catastrophic.”

To couple with his “catastrophic plan,” Mitchell suggested that patients needed to be “reconditioned” to visit community clinics for preventive medicine, rather than the emergency room. Particularly troubling to Mitchell was the fact that patients could receive a shot that cost the county $12,000 in the Emergency room, but only $100 through a clinic. To Mitchell, patients were wasting money by going to the Emergency Room. Mitchell said several times that coverage should also encourage “preventive” care.

In Los Angeles county, partnerships and other programs have already increased patient access to “preventive” care. The problem is that once patients learn, through their preventive visits, that they have a chronic disease, such as hypertension, diabetes or asthma, they don’t know how to care for it — and there is no coverage for it. For advocates, policy makers need to be equally as focused on opening access for maintenance of chronic disease.

Mitchell seemed impressed with Los Angeles County’s innovation and Camino de Salud concept, which tracks the frequent emergency room users. At several points, Mitchell said “The state is in the way” of such innovations really taking hold. Dr. Alan Kurd, medical director for Los Angeles County, however, said it was important for commissioners to understand that local governments need to be incentivized to innovate — that not all counties would take steps that Delgado did at Los Angeles County -USC hospital.


The commission is expected to have two more hearings before its report is released. Health Access will continue to monitor the commissions’ meetings and update advocates on the status and dates of those hearings so that advocates may help provide input to commissioners.

For more information, contact Hanh Kim Quach, Health Access policy coordinator, who wrote this report, at

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