Schwarzenegger's Ambitious Health Plan Has Risk And Many Critics
By Laura Kurtzman, Associated Press Writer - January 12, 2007SACRAMENTO (AP) _ Gov. Arnold Schwarzenegger is taking on just about every major interest group in California in his audacious effort to bring universal health care to the nation's biggest state: unions, small business, doctors, hospitals, insurance companies, conservatives.
Whether the former Hollywood action hero can prevail and get it passed _ or get it passed in still--recognizable form -- is far from clear.
"I think it's very difficult in its present form," said Bill Carrick, a Democratic strategist. "He's got universal Republican opposition to it, and the stakeholders are all going to get hit with a tax -- doctors, hospitals and employers -- so they're clearly going to be opposed to that."
The Republican governor unveiled a $12 billion-a-year plan on Monday to extend health care coverage to most of California's 6.5 million uninsured and make it the second state, behind Massachusetts, to require everyone to carry insurance. Coverage for the poorest of the poor would be free; for many others, it would be heavily subsidized.
Schwarzenegger also proposed to share the sacrifice by requiring individuals, employers and health care providers to contribute to the cost. He said the program will save billions, in part by providing preventive care, which is cheaper than waiting for people to get sick and treating them in the emergency room.
"Building on shared responsibility, where everyone does their part," the governor said, "we will fix California's broken health care system and create a model that can be used by the rest of the nation."
But for all his optimism, Schwarzenegger is getting some pushback. Some of those who will have to pay are opposed, or at least leery.
Economists warn the plan will expose the state to runaway costs.
Small employers say requiring them to spend at least 4 percent of payroll on health insurance or pay that much into a state pool will put them out of business.
"A jobs tax on employers and a mandate on small business owners is really a deal-killer," said Assembly GOP leader Mike Villines.
Republican legislators say the governor's plan raises taxes, which Schwarzenegger promised not to do during his re-election campaign.
Doctors are going to be asked to pay 2 percent of their gross profits, and hospitals 4 percent. Doctors are complaining that the cost will be passed along to patients, amounting to a tax on sick people.
Exactly where the insurance industry stands is not clear. The plan could mean a lot of new business for insurance companies _ perhaps 4 million to 5 million new customers. But insurers would no longer be allowed to turn people away for medical reasons.
Unions are protesting the requirement that everyone buy insurance, and say making workers pay 3 percent to 6 percent of their earnings is too heavy a burden. Union leaders also warn that many employers may find it cheaper to simply drop health insurance for their workers and pay into the state pool instead.
"What's the incentive to provide health care?" asked Angie Wei, a lobbyist with the California Federation of Labor. "We're concerned this will erode employer-based health coverage."
Unions are a key Democratic constituency, and the Democrats control both houses of the Legislature. On the other hand, after a blustery and combative period in office, Schwarzenegger has built considerable goodwill with Democrats, particularly with his aggressive efforts to reduce greenhouse gas emissions.
Richard Brown, director of the UCLA Center for Health Policy Research, said that with a GOP governor and both Democratic legislative leaders focused on the issue, it has a chance.
"Clearly, it's going to get somewhat redefined as it goes through the Legislature," he said. "The prospects are better than they have been, because we have a Republican governor."
One complicating factor: The plan may need a two-thirds majority in the Legislature to head off a lawsuit over whether the fees are really taxes. In California, tax increases require two-thirds approval, while fees need only a simple majority.
California has one of the highest rates of uninsured people in the nation, in large part because it has a lot of low-wage workers, many of them illegal immigrants. In Massachusetts, 13.1 percent are uninsured; in California, 20.7 percent.
Schwarzenegger said the plan can save money emphasizing preventive care, healthy behavior and technological innovations, such as electronic medical record keeping.
Economists laud the innovations but doubt the savings will materialize, saying health care inflation is driven mostly by advances in technology. They say the state will have to offer larger subsidies to keep insurance affordable.
"The way it's being sold is we're going to cover all these people for free," said Glenn Melnick, a health economist at the University of Southern California. "That's not going to happen. There will be a bigger subsidy than they're claiming, and it's going to get bigger, faster."
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