GOVERNOR'S REMARKS - Office of the Governor of the State of California

Thursday, 07/12/2007 1:30 pm

Governor Delivers Remarks on Health Care at Bay Area Council

MR. HARDEN:  Thank you.  Well, good morning, and welcome to San Ramon.  We're very happy, from all of the employees of AT&T, to be hosting this major event.  As we look around, health care is one of the most important issues we have, and like every business we're very concerned with the rising cost of health care.  In fact, you might say we're one of the most concerned, in that we have one of the largest health care bills of anyone in the country.  AT&T spends about 5.5 billion dollars a year on health care to cover about 1.2 million workers.  That includes not only the employees, but also includes our retirees and their families.  

So we're very interested in looking at anything, any initiatives, that in fact can constrain the rising costs of health care.  In fact, in February AT&T, in partnership with other businesses and with labor organizations, announced its support for a number of principles that will help lead to meaningful healthcare reform in the next few years.  We're hoping for sooner, as you might imagine.  Many organizations are finding common ground on this issue, because it's important to the economy, but it's also important to the health of the businesses going forward.  

The president of the Communications Workers of America, which is the largest union representing the workers of AT&T, said, and I quote:  "Our current system puts a huge strain on employers that provide quality benefits for employees, both current and retired, and their families.  It's forcing many US businesses to compete not only on the quality of their product, services, and performance, but instead on the cost of health care benefits."  End quote.  It's great to see that our employees are concerned about health care as much as we are.  

I know that the Governor has some very interesting ideas on this subject, and we all are very interested in hearing what he has to say, so without further ado, let me ask you to give the Governor of the State of California a warm welcome.  Governor Arnold Schwarzenegger.  Governor?  (Applause)

GOVERNOR:  Well, thank you very much.  It's nice to be here today, and I want to thank Tim for the wonderful introduction.  It's exactly the way I wrote it.  (Laughter)

And I also want to thank, of course, Jim Wunderman, for his great work for the Bay Area Council.  And it's nice to be here.  This morning, first thing when I came in here, people asked me if I worked out already.  I said, "Of course.  I work out every morning."  As a matter of fact, I'm proud that I already lifted 300 pounds.  I lifted Tim out of the chair.  That was a good lift, huh?  You see how it is right there?  (Applause)

Man, I feel all pumped up today, this is really good.  No, it's really great to be here today, and I want to thank AT&T for hosting this.  And Tim, I want to thank you for your great, great leadership and helping us, because without this we would never be able to do that.  I want to thank the Bay Area Council also for the great work that you are doing in shaping business in the San Francisco Bay Area for the last 60 plus years.  You've done an extraordinary job, and I think that you are the big reason of why California is enjoying the 1.7 trillion dollar economy.  

And you're also the big reason why we won last year with our Strategic Growth Plan, the infrastructure bonds, the 37 billion dollars plus the 5 billion dollars in water bonds.  I came to you early on and I asked you for your help to push that and to help me get it passed, and we did, and you helped me really turn my vision into reality.  And it is because you are a big believer in investing in the future of California, and I think this is very important, because you know that making sure that we have the transportation system for this growing population that we have, expanding our university system, building more schools, flood control, fixing our levees, and all this kind of infrastructure, is very, very important.  And you are a big believer, because that is exactly what makes our economy boom, or as I say, hum.  Humming is very important.  So I think that you should give yourself a big hand for that, for the great work that you have done.  (Applause)

And now, my friends, I'm back again, I'm back again to ask you again for your help.  As you know, this is very important.  I need your help, California needs your help, and I think that you could be again the big reason why we get something historic done in this state, which is health care reform.  Just as we did with Workers' Compensation, we have to fix our broken health care system once and for all, because it is the poison of our economy and it is hurting everybody.  Now, I mentioned that during my State of the State Address, and for more than  a year now we have been working very hard to put the pieces together, and we are very close to really bringing everyone together, all the stakeholders and everyone.  And I can tell you that as soon as we have a budget and we are finished with our budget negotiations, we will be going to intense negotiations in order to make this happen.  

It is a tough issue, obviously.  I mean, as probably a lot of you know, that the federal government has been talking about universal health care for almost 100 years.  They started talking about it when the Titanic went down.  In 1912 Teddy Roosevelt, when he was campaigning to go back to the White House for a third term, he was mentioning how important it is for America to have universal health care -- 1912.  And of course he lost the that election, and with that also died universal health care.  And now, almost 100 years later, we are still talking about universal health care.  

It is a very risky thing to do, and to tackle.  As you know, a lot of people that have failed were attacked viciously -- not that they were on the right track, but nevertheless they were attacked -- so I think that I believe that even though the federal government and other states were not able to do it, I think that we really can do it, and do something very historic, if we all work together.  I believe very strongly, like George Skelton, a tough-minded political columnist wrote in the LA Times last week that, "The stars are in rare alignment this summer for health care reform in California."  I totally agree with him on that.  I also agree with the editorial in the San Jose Mercury News that says that, "This is the best opportunity now for health care reform in a generation."  

I think it is outrageous, if you think about it, that a prosperous, progressive state like California, it's kind of a nation-state, the Golden State, one of the greatest economies in the world, has 6.5 million people that are uninsured.  It is a catastrophe for them, and it is a catastrophe for all Californians, for businesses and for families.  As a matter of fact, here we are the 7th largest economy in the world, and California is ranking 39th in the nation when it comes to our overall health care system -- 39th in the nation.  

Now, there are a number of different proposals that are floating around in Sacramento in order to fix this broken system, but I see health care reform as a shared responsibility, something that provides reliable and affordable health care for everyone, and helps California employers and workers at the same time.  Now, this is a very important issue, may I remind you, for all Californians, not just for employers.  All Californians agree.  As a matter of fact, there was a study done by the Public Policy Institute of California just recently, and it confirmed that 72 percent of all Californians have said that yes, our health care system is broken, and we must fix it.  They also, the same percentage, interestingly enough, agreed, 72 percent supported our plan, which requires everyone to be insured, mandatory health care insurance with costs shared by employers, health care providers, individuals, the federal government, state government, everyone should share in this responsibility.  

Like Workers' Compensation before it was fixed, the current health care system is, as I said, a huge burden to everybody, and it is punishing everybody.  Health care premiums are skyrocketing, and making it too expensive to provide benefits for our workers.  And let me tell you something, I have traveled up and down the state now for the last half year, we have had town hall meetings, and we have had roundtable discussions, and we brought everyone together and talked to everyone, if it is business leaders, labor leaders, if it is health care providers, consumer groups, the workers.  Everyone is in agreement that our health care costs are just too high and they can't afford it anymore.  And the fact of the matter is, not only are they too high and they're skyrocketing, but we are paying twice.  You are paying for your own health care, and you are paying also for those that are uninsured, which is through a hidden tax.  As a matter of fact, businesses in California right now are paying 14.7 billion dollars on that hidden tax.  

Now, yesterday the UCLA Center for Health Policy Research issued a comprehensive study that shines the bright spotlight on this problem.  Here are some of the findings:  

•    First, the percentage of people who get insurance at work is decreasing, is going down, since 2001 to 2005.  As a matter of fact, this has had such an effect that 700,000 fewer people had coverage through their jobs, despite a strong economic growth over that same period of time.

•    Second, the cost of family coverage offered through employers went up from 6,877 dollars in 2001 to 10,430 dollars in 2005.  Ladies and gentlemen, that is an increase of 66 percent in just four years.  And like I said, you cannot afford these kind of increases.  And you cannot pass it on to your customers, because you can't pass on every year double digit increases, or 20 to 30 percent increases, as we have heard from so many employers, because otherwise you will not be competitive, and that basically just means that your bottom line is shrinking and shrinking.  

•    Third, the study also found that more than 80 percent of the 6.5 million uninsured are actually workers and their families, because so many times we think that the uninsured are the unemployed, which is not the case.

•    And fourth, the study shows that more and more employees are turning down health benefits for themselves and their dependents because it is just too costly.  

So, as you can see, even the latest studies confirm what I have been saying all along, that we must fix this system, and we must fix it now.  

Now, here is the good news:  Democrats and Republicans in Sacramento agree that the system is broken, and both of the parties agree that it needs to be fixed, and this is the year to fix it, that the status quo is just unacceptable and it is unsustainable.  All agree with that.  But there are different ways, and different ways of thinking of how it should be done.  Some, for example, want government to take over the system, single-payer, what we have just heard earlier.  Others would place the burden squarely on the employers, having them pay premiums a minimum of 7.5 percent, 7.5 percent of the wages.  So that is, of course, outrageous.  Others want to have a system that is entirely market-based.  

Now, I do not believe that health care reform is about extracting 7.5 percent from the business community rather than spreading out the responsibility.  And I don't think that we should have it government run.  We have tried that before.  I mean, as you know, our prison health care system is government run.  Well, they ran it into the ground so the federal judge had to take over 13 years ago, so that's not a direction to go either.  

I believe that health care reform is about shared responsibility, it is about a comprehensive approach that features wellness and prevention, new information technology, cost containment, and an end to the hidden tax that is crippling California's economy.  

Now, how do we accomplish all of this?  Well, that's why I'm here today; I need your help.  Now it is time for you to commit and to send a clear signal to the legislature.  And what I mean by that is that up until now the business community in California has been helping us by saying yes, we need health care reform, while labor is out there saying yes, we need health care reform, everyone is out there saying yes, we need health care reform.  So now the whole of California knows we need health care reform and this is the year.  

But now you have to be more specific.  Now you have to narrow it down, because as I said, this health care reform, do you want the government to take over and run the system?  Because that's health care reform, but I don't think that's where you want to go.  Or do you wan to be punished and pay 7.5 percent of the wages?  I don't think that's where you want to go either.  So you have to be more specific from now on when you call the legislators, rather than just saying we want health care reform, we love what you're doing.  You don't love everything they're doing, trust me.  (Applause)

So make it clear it to them.  Make it clear to them.  Tell the legislators that you believe in shared responsibility.  Tell them that you believe that everyone should be covered.  Mandatory health care insurance, so that we can increase the risk pool.  And tell them that the insurance companies should not be able to refuse anybody.  It doesn't matter if it is because of age, or because of a medical history, no one should be refused.  And tell them that you don't want business to bear an unfair burden.  And tell them also that you want the private sector, not government, to run this system.  So those are the kind of things.  You've got to be very specific, what you like and what you don't like, so they get it.  You don't have to necessarily say, "We want Schwarzenschnitzel's system."  No, you don't have to go and say that.  You just say those things that I just told you, and then they will get it, of what system you want.  (Laughter)

I need your help on this, and I need your support.  If I get that help and that support, we can do it.  We can do with health care reform, exactly the same thing that we have done with Workers' Compensation reform.  Remember, it's giving now back to the private sector 13 to 14 billion dollars.  That's what we want to do with this.  We want to cut down the costs, we want to bring down that hidden tax, we want to make it affordable.  This is what this is all about.  And we can do that, just like with Workers' Comp, or like with our Strategic Growth Plan last year.  If we work together we can repair our broken system and make California a shining example for other states, and a shining example for Washington.  Washington can learn from us, as they are slowly doing also with the environmental issues.  So let's do it all together.  I'm counting on you.  Let's work together on this.  

Thank you very much.  Thank you.  (Applause)