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News Article

Sep 27, 2007

San Jose Mercury News: Schwarzenegger's Plan; The Democrats' Plan

By Mike Zapler

SACRAMENTO - Universal health care. The term, tossed around with ease by politicians looking to remake the state's medical system, can conjure up images of major upheaval.
But if Republican Gov. Arnold Schwarzenegger and Democratic lawmakers succeed in extending coverage to everyone, experts say the ways that people could be affected are far from universal.
People in well-paid, skilled jobs with generous health plans probably won't notice much difference, at least initially. Their employers offer good benefits to compete for talent, and no health-reform plan is likely to change that.
But for low-wage workers in jobs such as retail and fast food, and for millions of others anxious about losing their insurance and not being able to buy it on their own, any health care plan that emerges out of this fall's special legislative session could bring big changes when it comes to their medical care.
In short, health reform will mean very different things to different people.
"The impact will certainly vary depending on a person's circumstances," said Marian Mulkey, a senior program officer at the California Healthcare Foundation in Oakland. "Because both of these reform proposals build on the existing patchwork system of employer-based coverage and public programs, there are a number of different paths that people would experience."
Some scenarios
In other words, lawmakers want to expand, not scrap, the ways people currently get insurance - through work, government programs and on their own in the private market.
Here are a few hypothetical scenarios that help explain how the health plans could affect people in different circumstances:
* Employed, but underpaid and uninsured: Consider a waiter making $27,000 who is uninsured, either by choice or because his employer doesn't provide insurance. If the governor has his way, that person could find himself having to buy insurance - everyone would have to carry insurance under Schwarzenegger's plan - without a government subsidy. (Only people making less than $25,525 would qualify for government help under his plan, a threshold Democrats say is too low.)
The Democratic health plan would put that person in a better spot: Either his employer would have to start offering insurance, or he could buy benefits through a state pool, paying no more than $1,350 a year out of pocket.
* Highly skilled and well-paid: At the other end of the spectrum, a Silicon Valley engineer making $90,000 with full benefits probably wouldn't experience anything fundamentally new. But if her employer has been making her pick up a larger share of her premium because of spiraling health care costs, that trend may well continue. The governor and Democrats are considering asking voters to raise the state sales tax to help pay for universal health care - which would raise the price of cars, TVs, groceries and other goods purchased by the wealthy and poor alike.
* The muddled middle: The fates of people in neither of those camps - in mid-wage jobs, working for companies that are scaling back health benefits and shifting costs to workers - could be most in flux. Both reform plans give employers a tempting offer: Stop offering coverage and instead pay a percentage of payroll to the state.
Either plan could save companies money if they drop their coverage. The governor would charge them 4 percent of payroll, the Democrats 7.5 percent. Many businesses now spend upward of 10 percent on health care coverage.
It's tough to assess the impact on workers whose employers decided to drop coverage. Under the Democratic plan, those who make less than $30,630 - $61,950 for a family of four - would qualify for health insurance subsidies. Everyone else would be able to buy insurance through a state pool but with no government help. Under Schwarzenegger's plan, even fewer people would qualify for a subsidy.
* The anxious masses: How about the millions of Californians who have insurance now through work, but worry about losing it and not being able to replace it? Michael Moore's recent documentary, "Sicko," was filled with horror stories about insurance companies denying benefits to people with minor health problems, even ones long-ago cured.
Changing methods
Both reform plans would provide relief on this front by changing the way insurance companies do business. That would be welcome news to anyone who's worried about not being able to buy insurance on their own: 50- and 60-year-olds who want to retire early, cancer survivors afraid to leave a job and start their own business because they fear they couldn't get insurance and so on.
Schwarzenegger would force insurers to sell policies to people with pre-existing conditions. Insurance companies could set prices based on a few factors, such as age and geographic area.
The Democratic plan also would end insurers' practice of cherry-picking the healthiest people. It would, however, allow insurers to deny plans to the "sickest" 5 percent of applicants, who could instead obtain coverage through a state "high-risk" pool.
Assuming Schwarzenegger and Democrats can reach a compromise - as similar as their plans are, it could take billions of dollars to bridge a few key differences - it's likely some hybrid of their proposals would be approved by lawmakers this fall.
Voters would then be asked next year to approve a slate of taxes to provide the funding - and how they vote will almost certainly be influenced by how they're affected.
© 2007 CAHR