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News Article

Dec 6, 2007

Capitol Weekly: The New Health Care Reform Challenge

By Anthony York


Capitol Weekly  

When Gov. Arnold Schwarzenegger agreed to go to the ballot to seek funding for a plan to expand health care coverage, he eliminated a major hurdle to getting a plan approved. Without a funding component, the plan only needs a simple majority in the Legislature, eliminating the need for any Republican support.
But in the process, the governor created a new problem. Now, the Legislature is charged with devising a plan that stakeholders will not simply passively support. Schwarzenegger and Speaker Fabian Núñez must now find a way to concoct a plan that supporters are willing to spend millions of dollars on to get the funding mechanism approved on the November ballot.
That is the crux of the new health care balancing act: How far toward the governor can the speaker stretch while still ensuring that labor unions and major players in the  health care industry will be willing to open their pocketbooks?
"When the governor made the decision to go to the ballot for financing, he raised the threshold of what the deal needed to be for different stakeholders," said Anthony Wright, director of the consumer group Health Access. "There's a difference with what they'd be willing to tolerate versus what they're willing to campaign for."
The major sticking points continue to be who would be covered under a health care expansion plan and who should pay for it.
During the legislative year, most labor groups backed Núñez's AB8, which did not provide universal health care coverage. The main source of funding for the health care expansion in the speaker's proposal came from employers.
The governor's original plan was, in many ways, more ambitious, aiming to provide universal health care coverage. Included in the governor's plan was a requirement that every Californian carry health insurance. That individual mandate was seen as key to ensuring health insurance providers' support, or at least benign opposition, to a health care overhaul.
This fall, the speaker has moved toward the governor on the issue of the individual mandate, but a deal remains elusive. Núñez's new legislation, AB1X, includes an individual mandate, with an exception: California residents would be exempt from the new health insurance if the cost of carrying the insurance was more than 6.5 percent of their income.
There has also been wide disagreement over who should pay for the expanded coverage. Núñez's new proposal relies on a new $2-per-pack tobacco tax as well as new fees on hospitals. The governor's proposal called for leasing the state lottery to pay for the health care expansion.
This week, Capitol watchers speculated over whether a change at the top of one of the state's main labor organizations might be a harbinger of an imminent health care deal. Sal Rosselli stepped aside as head of the SEIU California State Council after a well-publicized spat with SEIU International President Andy Stern. Rosselli had also tangled with leaders of some of the state's largest locals, including Tyrone Freeman, president of an LA-based local representing home health care workers.
But just what, if anything, Rosselli's departure means to a health care deal is unclear. Even if Stern wants a deal, as many have speculated, it would still need to be sold to other labor groups and organizations that will be asked to pony up for a health care fight in November.
Meanwhile, business groups including Blue Cross, the state Chamber of Commerce and the California Restaurants Association are ready to challenge a health care deal if the bulk of the funding burden is still placed on employers.
The Restaurants Association led the charge to repeal SB2, a bill that would have required employers to provide health insurance for their workers. Voters were split on that measure, repealing it by a 51-49 margin. Schwarzenegger supported the repeal, while labor groups led the fight to keep the law in effect.
The restaurants are threatening to go ahead with a proposal of their own that would expand health care coverage and increase the state sales tax by 1 percent. Labor groups say the sales tax hike is regressive and lets employers off the hook for health care costs. Blue Cross may also hatch its own proposal for the November ballot, creating a scenario reminiscent of the fight over prescription drug benefits in 2005.
In that election, there were two ballot measures, Propositions 78 and 79. One was backed by labor, the other by the pharmaceutical drug industry. PhRMA spent millions during the campaign in an effort to defeat the labor-backed Proposition 78 and pass its own Proposition 79. The net effect was voter confusion, and both measures died with about 40 percent of the vote.
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