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PERATA ANNOUNCES HEALTH CARE PROPOSAL
(SACRAMENTO) - Senate President pro Tem Don Perata (D-Oakland) today unveiled a health care proposal to ensure that California’s working adults and their families have access to affordable health insurance. In a press conference, Perata urged legislative leaders to get down to business tackling one of the state’s biggest problems, the escalating cost of health insurance and the growing number of Californians who don’t have it. “The governor himself has declared 2007 as the year of health care reform,” Perata said. “He sees it as I do, a once-in-a-generation opportunity to do something significant, important and long lasting. We must not squander that opportunity.” “The present system – and that would be a generous use of that word – is a system that simply foments failure. Those who are sick get sicker before they seek medical care. And when they do, they do it in the most costly places: urgent care centers or emergency rooms.” “Those with health care insurance unreasonably and probably unknowingly subsidize those who don’t. Insured adults and families pay about $500 a year in masked costs, costs that are not evident in anything that they receive in return for their premium payments. This cost shift is simply destroying the entire system . . . for everyone.” “Here’s what I am proposing: We begin with what the parties of interest should be willing and able to accept. And I believe that that is insuring all working families . . . . That seems to be a goal that everybody can agree to.” “Today, everything is on the table and everyone has a seat. But those who sit down must come prepared to act.” “So the real question comes down to if we don’t do it now, then when are we going to do it? And if not the governor and the Legislature, then who is going to do it? This is why we are here. This is the job we have asked to be able to do. This is the most important thing that we can do this year and, I think, until it gets done.” Audio from the press conference and background information on the proposal can be found at Sen. Perata’s web site, http://dist09.casen.govoffice.com. Shared Responsibility – No More “Free Riders.” Building on the current system that provides workers with unemployment insurance and state disability insurance, all California workers and their dependents would be covered. Employers and employees would share the responsibility for the cost. All workers would be required to show proof of health coverage in order to claim certain tax credits for themselves and their dependents. Eligibility: All working Californians and their dependents. This represents 4.2 million of the 6.6 million who are estimated to be uninsured at some time during the year. The remaining uninsured population would continue to be covered by the current safety net. Health Insurance “Connector”: The Major Risk Medical Insurance Board (MRMIB) would be responsible for establishing the “Connector” and administering the program. The Connector would act as a purchasing pool for business (especially small employers), individuals and the uninsured. Like the model used by CalPERS, the Connector would develop standards for coverage and negotiate favorable rates by leveraging its purchasing power. Participating employees would be offered a choice of health plans that provide comprehensive health coverage including medical, hospital and prescription drug benefits. · Choice of Plans – Managed Competition. In this model, contracting health plans would compete on the basis of cost and quality. Employees would be able to choose selected plans arrayed in three tiers: Plans offered the first tier would be high quality and low cost and would require modest member co-pays (e.g., HMO-type plans) while plans in the higher level tiers (e.g., PPO-type plans) would require members to pay more. · Cost Containment. Participating health plans would be required to cap administrative costs and profits and implement evidence-based practices that will control growing health care costs. These include preventative care, case management for chronic diseases, promotion of health information technology, standardized billing practices, reduction of medical errors, incentives for healthy lifestyles, appropriate patient cost sharing and rational use of new technology. · Medi-Cal Managed Care Buy-in. To assure affordability, the Connector would be allowed to “buy in” on a negotiated basis to Medi-Cal managed care plans. These plans now provide coverage for more than 3 million Medi-Cal recipients at significantly lower rates than the commercial health insurance market. By leveraging the state’s purchasing power, the Connector would obtain low-cost coverage. · Underwriting standards. Contracting plans would be required to provide guaranteed issue and community rating. Individuals with pre-existing conditions who cannot get health insurance now or who are effectively priced out of the market would be able to get coverage through the Connector. Trust Fund: A Health Insurance Trust Fund would be established. Employer contributions and employee fees would be collected by EDD and deposited into the Trust Fund. Any other dedicated revenues would also be deposited in the Trust Fund. These funds would be used by the Connector to buy health coverage for eligible Californians. Pay or Play for Employers. All employers would be required to spend a certain percentage, yet to be determined, of social security wages (adjusted on a sliding scale basis) for employee health insurance costs. Employers who choose NOT to provide health insurance could elect to pay an equivalent amount (adjusted for risk) to the Trust Fund. Employee contributions equal to a certain percentage, yet to be determined, of payroll would be collected by the employer. Maximizing federal funds will help reduce the overall cost of the program. This would be accomplished by expanding eligibility for parents and children up to 300% of the federal poverty level. Coverage would be provided through the Connector, which would pay the non federal share of cost for the expansion. This may require a federal waiver. Medi-Cal Expansion for Parents. The state would submit a Medicaid state plan amendment to the federal government to increase Medi-Cal (1931b) coverage for working parents from 100% of the FPL to 300% of the FPL. This would cover about 1.2 million uninsured parents. Healthy Families Expansion for Children. The state would increase Healthy Families coverage for children from 250% of the FPL to 300% of the FPL. This would cover about 58,000 uninsured children. Individual Mandate. Enforcement through the Tax Code: All taxpayers would be required to proof of health coverage. If proof of insurance is not provided, the individual’s tax is computed without the benefit of the personal exemption credit or dependent credit. Cost of Average Health Care Premium How much California workers pay annually Percentage of large employers (200 or more workers) that is very likely or somewhat likely to increase the amount their employees pay for health insurance in 2007. 69% Projected Cost of Average Health Care Premium in 2015 (Inflation Adjusted) Average Annual Increase (1999-2005) Annual Premium Cost Shift Related to the Uninsured Number of Employers providing Health Insurance for Employees Number of Uninsured Californians Number of Uninsured in Families Where Head of Household Works Full Time # # # |