10/09/2007   GAAS:785:07   FOR IMMEDIATE RELEASE

Compromise Enhances Original Proposal, Maintains Core Principles

 

Governor Arnold Schwarzenegger today released language in bill form for the Health Care Security and Cost Reduction Act (the Act), legislation that reflects feedback from more than 1,000 meetings he and his health care team held with stakeholders and legislative leaders regarding the comprehensive health care reform proposal he announced in January.

The Act brings affordable health care coverage to every Californian by:

gEveryone is working so hard on this because whatfs at stake is a health care delivery system that works for all Californians,h said Gov. Schwarzenegger. gWe have the best opportunity for comprehensive health care reform in one hundred years because the more people study our plan, the more they agree with what we have been saying since day one: if everyone pitches in and does their part, then everyone will benefit.h

 

The Act maintains the core principles of the proposal that Governor Schwarzenegger introduced in January.  While continuing to reduce the hidden tax, lower costs and provide access to coverage for all Californians, differences in the compromise legislation include:


Core Principles:

January Proposal

Health Care Security And Cost Reduction Act

Universal Coverage

Required all Californians to have health insurance coverage.

Maintains requirement that all Californians obtain coverage, and strengthens provisions to increase affordability for working families.

Affordability

Provided state financial assistance through a purchasing pool to Californians with incomes between 100-250% of the poverty level.

Increases affordability for working families even further by reducing the amount that low and moderate income individuals will have to pay for coverage in the state subsidized pool, limits premiums based on income, and creates a tax credit for individuals/families between 250-350% of the federal poverty level.

The legislation also requires employers to offer employees IRS Code Section 125 plans. In addition, employers and their employees who choose a Health Savings Account health benefit product will receive tax savings consistent with federal law.

Guarantee Issue

Required insurance to guarantee coverage, with limits on how much they can charge based on age or health status, so that all individuals have access to affordable products.

Maintains guarantee issue by ensuring that all Californians will be able to buy health insurance regardless of their medical history or age. Phases in elimination of medical rating and protects consumers against significant rate spikes based on their health status by putting parameters on what insurers can charge above or below a standard rate.

Financing

Doctorfs participation: Required that doctors contribute a 2% fee to subsidize a purchasing pool for low income Californians and, in return, receive more insured patients and higher Medi-Cal reimbursement.

The basic premise of shared responsibility is that everyone who benefits from the reforms must contribute in a meaningful way. Although doctors are no longer required to contribute to the financing under the Act, they have additional responsibilities and incentives to care for many newly insured individuals.

Employer Contribution: Required employers with 10 or more employees who choose not to offer health coverage to contribute an amount equal to 4% of payroll toward the cost of employeesf health coverage.

Protects small businesses by basing contributions on payroll. Under the plan employers who do not offer health care coverage will make a contribution based upon a sliding scale fee from 0-4 percent based on their total payroll.

Lottery:

Not included.

The bill proposes to lease the California Lottery to help pay for health care costs.

Public Hospitals

 

Counties would retain $1 billion in current funding (primarily for outpatient services) and county and UC hospitals will retain $1 billion in federal Disproportionate Share Hospital (DSH) funds and in addition, some gsafety neth funds for primarily inpatient services.

Californiafs public hospitals make significant financial gains under the new reforms. In addition to the funding increases included in the January 2007 proposal, the new legislation includes $500 million in additional funding for public hospitals. The Act includes protections to support county hospitals in the context of universal coverage.

Minimum Benefit

$5,000 deductible plan with maximum out-of-pocket limits of $7,500 per person and $10,000 per family.

Does not define the minimum health insurance level. Instead, it directs the Secretary of Health and Human Services to establish and adopt the minimum benefit level via the regulatory process, which then cannot be changed except by legislative action. The minimum benefit level must: cover medical, hospital, preventive and prescription drug services; promote access to care; and must be set at a level where premiums are affordable.


 

A January 2007 study by MIT economist Dr. Jon Gruber shows that the Governor's health care proposal will provide health insurance for an additional 4.1 million Californians out of the 4.8 million uninsured Californians at any given time, and that the reforms will have little impact on how many employers cover their workers.

 

According to a recent U.S. Census Bureau report, approximately 6.7 million Californians – more than ever before – are uninsured.

 

More information about the Governorfs health care proposal can be found at: http://www.fixourhealthcare.com/

 

The Health Care Security and Cost Reduction Act can be found at: http://gov.ca.gov/pdf/gov/HCR-RN0729963.pdf (49.8 MB PDF file)



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