A full report on a long hearing on a big topic…

Wednesday, July 11, 2007

* Hundreds of health advocates storm Capitol to support reform efforts this year
* Amendments taken, debated; Many specific issues raised
* Stage set for legislative negotiations with Governor Schwarzenegger
* Other bills of interest to health advocates considered

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With the deadline for bills to pass committees coming at the end of the week, the Senate Health Committee, chaired by Senator Sheila Kuehl, heard testimony and voted on over two-dozen bills late into Wednesday evening.

The first bill heard was the most far-reaching, AB8(Nunez/Perata), the joint health care reform proposal by legislative leadership, which is expected to be the vehicle for negotiations this summer with Governor Arnold Schwarzenegger, who put forward his own proposal at the beginning of the year.

Speaker Fabian Nunez and Senate President Pro Tem Don Perata presented their new, unified AB8, and as expected, got all seven Democrats on the committee voting for the bill. The bill needed six votes to pass.

Hundreds of health advocates and consumers from the “It’s OUR Healthcare” campaign turned out at Wednesday’s hearing to urge passage of health reform, this year, and also to make press for additional provisions about affordability, cost containment, and other issues.

THE BILL: AB8 would provide more security to those with insurance, and expand coverage to 3.4 million Californians who are uninsured. Nunez described the bill: “It is based on the principle of shared responsibility between government, individuals, and employers. The key components are the following: major reforms for the insurance industry, expansion of public insurance programs, key measures to contain the cost of health care, measures to improve and reward health care quality, and provisions that will improve the private health care market.”

AB8 would expand public insurance programs to children and parents up to 300% of the federal poverty level ($30,000 for an individual, $62,000 for a family of four), and remove many of the administrative barriers to enrollment to Medi-Cal and other programs, such as the assets test, depravation test, and semi-annual status reports.

It would set a minimum employer contribution to health care of 7.5% of payroll, and also provide new option for employers to pay such a fee to a statewide purchasing pool that would provide coverage for all their workers. Such a pool would be funded by employer contributions, worker contributions, reinvested state savings, federal matching funds, and new use of federal and state tax breaks.

The bill would makes reforms to insurance market, including a minimum medical loss ratio so that 85% of premium dollars go to patient care, and more protections for mid-size employers and purchasers. With AB2(Dymally), a companion bill which also passes the committee, the reforms would prevent insurers from denying all but 3-5% of consumers because of their health status, and would fund a high-risk pool to provide better access to coverage for those with “pre-existing conditions.”

Saying he didn’t want to “oversell” the bill, Assembly Speaker Fabian Nunez acknowledged that the bill was still a “work in progress.”

“While this is not a perfect plan, we believe it is a thoughtful plan that will help pave the way for comprehensive reform,’’ he said. “…Clearly there is no greater issue of state interest or urgency that we can be working on today than improving on our fragile health care system. This is a rare opportunity we have….we need to act now. We need to take advantage of the opportunity we have before us.’’

Senate President Don Perata said it was important to move AB8 this year, but indicated that his preference was a national solution. “There’s no doubt that we ought to have a national health care program… It’s scandalous that a country like ours is woeful in the way it treats and responds to people who are in ill health,’’ he said. “Until that day comes, California must provide leadership, not unlike what we did with AB32,” last year’s global warming bill.

AMENDMENTS DEBATED: In preparation for the committee and at the hearing, Speaker Nunez took a range of amendments suggested by Kuehl’s Health Committee. However, Nunez said he could not, at this time, accept the committee suggestion — which consumer groups supported — that total health care costs (including premiums, deductibles and other out-of-pocket costs) be limited to 5 percent of a family’s income. Right now, under AB8, only families in the purchasing pool under 300% of poverty ($62,000 for a family of four annually) are guaranteed to not have to pay more than 5% on just their premium.

“We’re still working on many aspects of the bill…that’s not to say that Sen. Perata and I are not committed to making sure that as we more fully develop the bill, that we can allow people to purchase an affordable plan.” he said. “Particularly if you are going to require them to have insurance, we believe it is our obligation and our responsibility to be able to make available to them a health care product that is affordable. Otherwise, it is not good government to impose upon people, to have a requirement, and not be able to provide them with a health insurance premium that when they pay [with] their our-of-pocket share, is [not] going to cost them more that what [they need] to keep a roof over their head.” Nunez later said that while he “would love nothing more” to place a cap on costs for all consumers, he could not commit to it at the moment because he wasn’t sure if there would be enough money to do that.

Kuehl urged that in negotiations with the Governor, to include the concept of “affordability.” She pointed out that Massachusetts did exempt individuals from a requirement to get coverage if that coverage wasn’t “affordable.”

Nunez also did not accept amendments that would have established minimum package of benefits for private group coverage, with regard to preventative care and cost sharing. AB8 does have a basic HMO benefit (Knox/Keene and prescription drugs) in the purchasing pool. Nunez responded that AB8 does establish three standardized products in the overall private market, to help consumers better make comparisons between plans, allowing for “apples to apples” comparisons.


Sen. Elaine Alquist, a proud co-author, started discussion by raising the hope for additional cost containment provisions, to make it easier for purchasers of health care to shop for care based on cost and quality, to make the statewide purchasing pool as big as possible, and to consider allowing county public insurers on the market compete with private plans to help drive down costs.

Assembly Health Committee Chair Merv Dymally also made a quick comment, commenting on eight town hall meetings, where there was support for both AB8 and SB840, Senator Kuehl’s bill. He referred to the long line of Governors since Earl Warren in 1945 that have confronted health care issues, and hoped that this year’s efforts would be more successful.

The committee took nearly an hour of testimony from parties who were watching the bill. Comments on the bill fell into the following categories – Support, Support if amended, No position, and Opposed.

SUPPORT: The 100% Campaign (made up of three children’s groups) and PICO California expressed their support for the measure, as part of their long-standing goal of covering all California ’s children, as well as their support for broader reform.

SUPPORT IF AMENDED: These stakeholders included the California Labor Federation, Health Access California, and the Its Our HealthCare coalition, Western Center on Law and Poverty, Service Employees International Union, Congress of California Seniors, Consumers Union, American Federation of State County and Municipal Employees, National Multiple Sclerosis Society, California Medical Association, Latino Issues Forum and Having Our Say Coalition, Blue Shield of California, Kaiser Permanente, California Primary Care Association, AARP, ACORN, California Black Health Network, California Pan Ethnic Health Network, Jericho, CALPIRG, California Optometric Association, California Chronic Care Coalition, TMJ Society, American Diabetes Association, Alzheimer’s Association, California Academy of Family Physicians, and the American Cancer Society.

Many consumer and community groups appreciated many of the provisions of the AB8, from the statewide purchasing pool to the expanded public programs to the increased access for those with “pre-existing conditions.”

Consumers groups echoed similar requests, asking for assurances about affordability for consumers, both for premiums and out-of-pocket costs, and offered several cost containment suggestions, including oversight of rate increases, creation of public insurers to compete with private plans to drive down costs; bulk purchasing of prescription drugs, and the ability for health purchasers to have more transparency for what they’re paying for. Given the larger role for the Managed Risk Medical Insurance Board (MRMIB), some also asked that lawmakers review how the board is structured and governed.

Other advocates and lobbyists called for coverage and access for childless adults without children at home, due process protections for those in the Medi-Cal expansions, consideration for adequate health care workforce and facilities and primary care capacity, specific provisions on prevention of health problems and medical errors, cultural and linguistic access for patients, and increased Medi-Cal provider reimbursements.

Many patient groups urged full “guaranteed issue,” and some said they would support an individual mandate to reach that goal. Health plans Blue Shield and Kaiser Permanente also announced their tentative support for that position, saying they if they were required to offer coverage to everyone, all Californians should also be required to have coverage.

CONCERN/NEUTRAL: Senator Kuehl allowed brief comments by groups without positions, including the California School Employees Association and California Association for Hospice Care.

OPPOSITION: The list of opponents, both those seeking amendments and those implacable in their position, included the National Federation of Independent Businesses, California Small Business Association, California Hispanic Chamber of Commerce, California Association of Health Plans, California Manufacturers and Technology Association, California Chamber of Commerce, California Farm Bureau Federation, California Restaurant Association, California Association of Health Underwriters, Aetna, Cigna, Protection and Advocacy Inc., National Association of Insurance and Financial Advisors, Association of California Health and Life Insurance Companies, Coalition to Advance Health Care Reform, the California Nurses Association, and a few business owners.

Several business organizations expressed opposition to the minimum employer contribution. NFIB cited a study they released this week that predicted job loss, increased costs, and lost sales. (A study released yesterday by UC-Berkeley debunked that notion, predicting a “net positive” economic impact.) Many opposed the notion that the assessment was a fee, rather than a tax. Others argued for cost containment and “fiscal discipline” measures, and expressed fear that the fee on employers would go up. Restaurant, grocer, and farm representatives argued that their industries would be especially impacted. Some wanted exemptions for small or low-margin businesses.

Health underwriters disputed that a large purchasing pool could bring down costs, and expressed concern on the minimum medical loss ratio. Health plans opposed the insurance market reforms in both the small group and individual markets, and the lack of an individual mandate.

Protection and Advocacy, Inc., representing people with disabilities, was opposed unless amended, expressing concern about a high-risk pool of patients with expensive medical conditions that was separate from the rest of covered Californians. And the California Nurses Association, in their opposition, said health insurance is not health care, and expressed fear that AB8 is, or will be, the Governor’s proposal.


Republican Sen. Sam Aanestad said he was concerned that AB8 was the main vehicle, but with so much contention in opposition, and even supporters seeking amendments, he urged Nunez to take another year. Aanestad said he feared that the legislature was trying to do too much too quickly and might end up fouling up the system – as lawmakers did with electricity deregulation.

Democratic Sen. Darrell Steinberg, however, countered that there was momentum on health care this year. “Sometimes, you just have to capture the moment.” The moment, Steinberg also said, may never come to naysayers who continue to hold reform back year after year. While they profess to want an improved health care system, they are unwilling to support spending money on it. “You either want to get something done or you don’t. It’s not free,” he said.

Republican Sen. Mark Wyland said “this is the sort of bill we should be working on,” but raised concerns. He’s watched over the years as his own businesses started paying less and less for employee health care, and urged more cost containment. He said lawmakers need to consider that not all businesses will be affected the same way. He also said lawmakers needed to think about how to help businesses that must compete on an international level with companies that do not have to factor in environmental quality and health costs.

Sen. Sheila Kuehl joked that she didn’t like AB8 as much as she liked her own bill, SB840, and she thanked Speaker Nunez’s strong support of her proposal. That said, Kuehl acknowledged that in her role as Health Committee Chair, “my responsibility is ‘in the realm of the possible and in the realm of the present.’”

Kuehl said she would vote for AB8 passage out of committee, so that the Legislature needed to have a bill that was “better than the governor’s proposal.’’ But, she said, “my job has been to push as hard as I can on behalf of the people to hammer on the issue of affordability and coverage,” and she urged those principles as touchstones in negotiations with the Governor.
Democratic Sen. Cedillo agreed with Kuehl’s statements and said “if we had a different governor, we might have a different discussion,” citing his support of SB840. But, he also said of AB8, “Frankly, this is a really good bill…. I don’t want to say this is a question of making perfection the enemy of the good, but we have had setbacks,” citing failed efforts at immigration reform recently. “This is a very good bill for a lot of people,’’ Cedillo said.

In closing, Nunez cited his support for Senator Kuehl’s SB840 last year and this year. On his bill, he also acknowledged the opposing viewpoints on his bill, but cautioned, “There are too many problems (in the health care system) for us to wait and come up with a perfect solution that everybody can support…I would argue when you come up with a good solution…you will always have people who oppose it.” He continued, “While it is not a perfect bill, it is a very solid piece of legislation that Senator Perata and I are very proud of… The framework is there…. There are still amendments that we are working on taking.’’

“There is nothing in this bill that will prevent people who like the current system, for those who it works for, to continue to enjoy it… There are 3.4 million who are going to get health care. We’re going to work to improve upon the market and make it more friendly to the ordinary Californian, working California , middle-class California . In the end, it is our goal to expand coverage, improve quality and do no harm,’’ he said.


Health advocates also followed several other bills with high interest, including two other bills that were seen as complementary to AB8: AB2 (Dymally) and AB1554 (Jones).

AB2 (Dymally) would reform the individual insurance market, restricting insurers’ practices of denying coverage to consumers with “pre-existing conditions.’’ Instead, the bill places MRMIB in charge of coming up with a standardized questionnaire for insurers to use in determining eligibility for coverage. Those consumers who were denied coverage in the private market would still be able to get coverage through an improved version of the state’s current MRMIP program. That program would no longer have a $75,000 annual cap on benefits, and all California enrollees would pay a small assessment 50 cent to fund the high-risk pool. All Democrats voted in favor of AB2, and no organizations opposed the measure.

AB1554 (Jones) would have regulated insurance rates, requiring health plans to seek permission whenever they wanted rate increases. The bill fell one vote short of passage. Five Democrats voted for the bill, but Sens. Leland Yee and Gloria Negrete McLeod declined to vote for the bill.

OTHER BILLS OF INTEREST TO HEALTH ADVOCATES: With this week being the last that policy committees could hear bills, the health committee busily heard another two dozen bills. Other that are of interest to health advocates included:

* AB1 (Laird) – PASSED – Would allow children in families up to 300% of poverty to enroll in Healthy Families. Support.
* AB12 (Beall) – PASSED – Creates the Adult Health Coverage Expansion Program in Santa Clara County . Support.
* AB55 (Dymally) — PASSED — Would increase Medi-Cal eligibility for adults to 133% of poverty. Support.
* AB1113 (Brownley) – PASSED – Extends and increases eligibility for the Medi-Cal California Working Disabled Program. Support.
* AB1472 (Leno) – PASSED – Encourages healthy communities. Support.

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