We are still looking at the details of AB x1 1, but it’s clear that the framework proposed by the Legislative leadership addressed all of the Governor’s reasons for vetoing AB8 (Nunez/Perata).
The Governor’s announcement on Thursday that he moved to a more realistic employer fee was important, but it was probably more significant that he drew some constrasts as well. He felt he needed to, because otherwise, there would be no reason why he shouldn’t agree with the framework of the Nunez/Perata proposal.
Let’s look at his veto statements, and the framework of AB x1 1. From the Governor’s press release detailing his reasons for vetoing AB8: “Governor Arnold Schwarzenegger today vetoed AB 8, by Assembly Speaker Fabian Núñez (D-Los Angeles) and Senate President Pro Tem Don Perata (D-Oakland), a bill that does not cover all Californians, does not address the key issues to reduce health care costs and places too much of the financial burden on employers.” Let’s do this one at a time:
“This bill does not achieve coverage for all – a critical step needed to reduce health care costs for everyone.”
* AB x1 1 would provide more help to more Californians than the Governor’s own plan, in three ways:
* It extends public programs to 300% of the federal poverty level, rather than the Governor’s 250%.
* It extends subsidies to people up to 450% of the federal poverty level, rather than the Governor’s 350% or 400%.
* It does a better job of encouraging employer-based coverage, with a higher minimum employer contribution and a two-pronged test to ensure that spending is spread among the employers’ workers.
“Instead, AB 8 puts more pressure on an already broken health care system and places an unreasonable financial burden on businesses. A 7.5 percent fee would force employers to shoulder the entire burden of health care reform – a devastating blow to small business in California,”
* AB x1 1 lowers the employer fee down to 6.5%, with a sliding scale for small employers.
* The statement was incorrect, since the employer fee made up half the revenues of the health care plan, alongside several other funding streams, including individual contributions, federal matching funds, reinvested state savings, Section 125 tax breaks, and an insurer assessment.
* AB x 1 1 adds to that mix with additional sources, including a tobacco tax, a hospital fee, additional federal matching funds, more individual contributions, and reinvested savings potentially from counties. As a percentage of the overall package, the employer fee is a fraction of the overall revenues.
From http://www.fixourhealthcare.ca.gov/, here are other principles the Governor laid out in response to AB8:
1. Guarantees that every Californian can get insurance. Under the Governor’s plan, insurers will be required to sell insurance to anyone who wants to buy it on the individual market. “Guarantee Issue” will give Californians who are currently denied coverage because of their medical history or age the ability to purchase insurance.
* AB x1 1 also gives all Californians the ability to purchase insurance.
2. Provides coverage for all and requires that every Californian have insurance. Whether they get it through their employer, buy it on the individual market, or enroll in subsidized coverage, every Californian must carry a minimum level of insurance under the Governor’s plan. This will reduce the hidden tax that insured individuals and families — and employers who provide insurance — now pay to cover the uninsured.
* AB x1 1 has an individual mandate, tied to affordability.
3. Increases Medi-Cal reimbursements to doctors and hospitals. The Governor’s proposal significantly increases Medi-Cal reimbursements by the government to doctors and hospitals, reducing their need to shift costs onto insured individuals, families and employers.
* AB x1 1 has a hospital fee and a corresponding Medi-Cal rate increase.
4. Promotes balanced financing for health care. Health care reform should not come by requiring employers to pay the entire cost.
* AB x1 1 has at least eight different funding sources, with employers being a fraction of the revenue.
5. Rewards healthy choices and contains costs. The Governor’s plan outlines a comprehensive prevention policy that encourages and rewards healthy behaviors; supports new efforts to fight chronic conditions including diabetes and obesity; reduces smoking; promotes more efficient service delivery and will help prevent medical errors.
* AB x1 1 has all the prevention and cost containment concepts of the Governor, and others with more teeth, including ensuring transparency of health cost and quality; bulk purchasing of prescription drugs, and the option of a public insurer.
With all this agreement, the Governor will need to sign the proposal heading toward his desk, or think of new reasons to object…