The Assembly weighs in…

Tuesday, February 20, 2007

• Governor’s Plan Put in Hot Spotlight; Plans of Speaker and Senate President Reviewed
• Assemblymembers Ask About Affordability & Examine Cost Savings

The Assembly Health Committee, chaired by Assemblyman Mervyn Dymally, on Tuesday held the first of two informational hearings, titled “Health Care Reform: What Are the Choices?” They will examine the different approaches to health care that have been proposed this year.

Tuesday’s hearing reviewed Gov. Arnold Schwarzenegger’s proposal, as well as those of the two Democratic leaders. Dymally said he had also invited Senate Republicans, who have announced their own plan, but reported that they declined the invitation. Senator Kuehl’s proposal for a universal, single-payer health system will be the subject of next Tuesday’s hearing.


After introductory remarks to welcome the new Assembly Health Committee, Assembly Speaker Fabian Nunez said he was encouraged by the momentum this year. He cited the several comprehensive proposals including his own, as well as those by the Governor, by Senate President Perata, and by Senator Kuehl. He mentioned the effort of passing Kuehl’s legislation last year, and his continued support for the bill this year, even with his own proposal. “We have a very rare opportunity to do something fundamental. We have to do it right. We can’t waste this chance,” said Nunez, who reviewed the elements of his plan to expand public programs, require employers to contribute, create a state health purchasing pool and restrict insurers from denying potential policy holders based on minor health conditions.

As in the Senate Health hearing last Thursday, California Health and Human Services Secretary Kim Belshe reiterated that the administration was flexible about the final approach – so much that they do not currently have, nor are they seeking, an author for their proposal at this point. “We want to start with a process focused on principles,’’ she said. “We must create a functional, competitive health care market with complementary proposals…. What is the proper balance between strategies?’’

The other main presenter was Senate staffer David Panush, representing Senate President Pro Tem Don Perata and his proposal. All three mentioned an interest and the real possibility of action this year.


Questions by assemblymembers were wide-ranging, although Republicans also weighed in more heavily this week with their thoughts.

Assemblyman Dave Jones, D-Sacramento, picked up on questions asked by Senators last week about whether health coverage will actually be affordable to people above 250% of poverty, which is the cut-off for Californians in the Governor’s plan who would received subsidized coverage through a state purchasing pool and those who would need to buy coverage on their own. For instance, a single man earning $27,000 is above 250% of poverty, yet that person could ill afford the $3,200 annually for health coverage, Jones said.

Belshe, again, reiterated that the administration is still studying the issue of affordability, but that she believed the combination of expanded coverage (which she stated would lower costs), a bare bones $5,000-deductible plan, and the 15 percent cap on administration and profit would help drive costs down. “We are endeavoring to promote a far more functional healthcare system. By bringing up the bottom, we’ll be relieving pressure from the top,’’ she said.

Belshe also addressed critiques levied by the Legislative Analysts’ Office last week that said the administration’s anticipation of $5.4 billion in federal dollars was too optimistic. She said conversations with the previous U.S. Health and Human services administration secretary said their estimations were sound, although, they did not have that guarantee on paper.

Another area of contention is nearly $2 billion that the state would take from counties, in anticipation that fewer uninsured would be flooding the emergency rooms of public hospitals. Counties, however, would still be the place where many uninsured and undocumented immigrants received care. Assemblyman Hector DeLaTorre said this approach was like Wimpy in Popeye saying, “I’ll gladly pay you Tuesday for a hamburger today.”

Belshe acknowledged that “issues have been raised,’’ but said the counties were worked in as part of the solution because the governor’s proposal was an attempt to be comprehensive, rather than patchwork.’’ She said she understood that legions of uninsured would not be suddenly insured overnight and seek primary and preventive care away from emergency rooms. Because of that, the administration would be willing to talk about timing and implementation to make sure counties and patients did not suffer.


Republicans took the opportunity to question whether any of the plans could really bank savings predicted.

Republican Assemblyman Alan Nakanishi, the vice-chair of the committee and a Lodi ophthamologist, focused in on the Medi-Cal expansion proposals. He questioned Speaker Nunez whether or not state costs would actually decrease if there were more people in the system – needing and acquiring – more services. Nakanishi may as well been referring to the Governor’s, Senate Leader Perata’s, and Sen. Sheila Kuehl’s single-payer plan as well, as all of them include an expansion in programs and coverage.

In response, Speaker Nunez said that coverage – public program, or private health insurance – would force people to get preventive and primary care, which is cheaper than getting care at the last minute through the emergency room. Even though there will be more people covered, those patients will be using health care more appropriately – seeking care earlier and more cheaply — and that will save money.

Assemblyman Bill Emmerson, R-Redlands, followed Nakanishi’s cue and asked Health and Human Services Secretary about “overutilization’’ because there are more people insured, and his belief that many of the costs would be driven by new and expensive technologies. “Then, do we need to start rationing care?’’ he asked.

Belshe echoed Nunez’ previous comments, saying the state needed to take the opportunity to “drive people to primary and preventive care and keep people out of the ER.” By having people take care of their health needs more cheaply, there would be more money to go around for everyone. She noted that there needed to be a shift in attitude, toward preventive care and maintenance on the front end, rather than episodic care on the back end. As it is now, in addition to the uninsured who get care in the Emergency Room, so do Medi-Cal patients, who end up in the emergency room because there aren’t enough primary care physicians to take care of them.

Republican Ted Gaines, from the foothills, repeated Emmerson’s and Nakanishi’s concern about too many people using too much health care. But he took a different angle. “The white elephant that no one’s talking about is the middle class who can access care easily and services will be overutilized by folks with health care,’’ said Gaines. He went a bit further, also, implying that the individual mandate portion was a backdoor to getting “socialized medicine’’ advocated for health savings accounts and said he wanted to allow market forces to prevail and drive down prices.

Belshe said the administration sympathized with middle-income Californians who have been jolted by higher and higher premium and health costs in recent years. But it requires a two-pronged approach. The administration believed in covering everyone – that means through an individual mandate, and regulatory controls. Part of that was also getting to cost drivers, which in the administration’s view, was chronic disease and lifestyle choices.“We need to do more on prevention and wellness,’’ said Belshe. She said the administration did propose conforming state tax law to federal law in allowing for health savings accounts.

Republicans also questioned why certain groups were being targeted. Nakanishi questioned why all providers were being asked to pay up. “The 2 percent to 4 percent fee is unfair. There are a lot of providers who don’t provide to Medi-Cal patients,’’ said Nakanishi, who is one of the founders of the Delta Eye Medical Group in San Joaquin County. Nakanishi suggested limiting the provider “dividend’’ payments to just the Medi-Cal providers, who already operate on very thin margins, or in the red. His view – they are the ones who will be getting increased Medi-Cal reimbursements, they should pay. The Medi-Cal rate increase proposed would be the first in several years.

Belshe acknowledged, “Not all providers are the same…But we would hope to see more physicians provide to Medi-Cal patients.’’ The administration, though, justified imposing the provider fee on everyone because everyone would be benefiting from the extra $10-$15 billion that will flow into the health budget as more patients are insured. The requirement that plans dedicate 85% of premium dollars to health care should also help compensate providers better.

Bill Emmerson stated that he didn’t like the employer mandate, requiring employers to pay 4 percent of payroll for health care. He said it was too expensive, but also said that it might create an exodus of employers who already provide more health care, but see 4 percent as a cheaper option.

Belshe said that MIT economist Jonathan Gruber – who has been helping the administration work through the issue – did not see as much leakage in employer-sponsored plans because many businesses who offer coverage do so for recruitment and retention. She also said the administration was working to discourage employers from dropping their health coverage.


Assemblywoman Karen Bass, D-Los Angeles, feared that the enforcement of the individual mandate would be too punitive. For instance, if schools were asked to verify if children had health coverage – as the do with immunizations – would children be turned away from school if they are not insured.

Belshe said the goal is not to “criminalize health coverage’’ but more to encourage and facilitate enrollment. Schools could help identify children who qualified for public programs and enroll them. Bass hoped that meant children would just be asked to fill out paperwork and not deterred from school.

During Speaker Nunez’ presentation, Assemblywoman Loni Hancock from Berkeley, asked if his plan would limit insurance administrative and overhead costs. Nunez replied sheepishly that the governor’s proposal was actually stronger on that front, but that Nunez would be putting that idea into his proposal also.

Assemblyman Jones also asked whether small group market reforms would be extended to mid-size businesses. The administration said it was still examining the issue.


The committee took testimony from stakeholders, who mostly said they were eager to be part of the solution. Among the stakeholders who spoke were SEIU, California Labor Federation, Planned Parenthood, CALPIRG, California Nurses Association, Western Center on Law and Poverty, Health Care for All/Health Care Organizing Project, California Pan-Ethnic Health Network, Older Women’s League, League of California Cities, California Association of Counties, the California Medical Association, California Hospital Association, and the California Restaurant Association.

Among the comments:

• SEIU said that employer mandates were not sufficient – particularly in light of the fact that workers have to wait months – even years – before coverage kicks in. In the meantime, they’d still be subject to the individual mandate.

• Dovetailing with that sentiment, the California Labor Federation noted that more than 50% of retail clerks are now uninsured as a result of the Southern California grocery contract from three years ago. The Labor Federation also noted that the workers compensation compromised reached a couple of years ago was not acceptable. Since then, even though employers saved $9 billion, injured workers have suffered while insurance company profits have soared. For every premium dollar that comes in, only 31 cents goes to benefits. Lobbyist Angie Wei urged that a health care deal do better than what came out of worker’s compensation talks.

• CalPIRG’s Emily Clayton, sporting the consumer-health campaign sticker “It’s Our Healthcare’’ enumerated three guiding principals for lawmakers to consider in the coming year, including: 1)Tackling problems with access, allowing Californians to get coverage they need when they need it, taking away the ability for insurers to cherry-pick only healthy patients; 2) Dealing with rising costs, ensuring that money going into the system is spent on health care. To that end, a strong medical-loss ratio is recommended, and 3) Focusing on quality and preserving the HMO Patient Bill of Rights, because health insurance does not help anyone if it they must pay thousands in out-of-pocket costs and are unable to get care when they need it.

• California Pan Ethnic Health Network urged lawmakers not to forget health disparities plaguing communities of color. Any comprehensive reform must also address inequities in health delivery that affect different minority groups.

• Planned Parenthood said family planning – which can be a big cost saver — must also be factored into health reform.

• The California Restaurant Association explained the slim profit margins many small restaurants live on and any employer mandate would negatively impact them.

Next Tuesday, the the Assembly Health Committee will be dedicated to examining Sen. Sheila Kuehl’s SB840 single payer proposal.

For more information on this report or on other issues, contact the reporter of this udpate, Hanh Kim Quach, policy coordinator, Health Access, 916-497-0923 x206, or

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