From the Los Angeles Times
Panel kills Schwarzenegger's health plan
Calling it 'fundamentally flawed,' Senate Health
Committee rejects the governor's proposal requiring insurance coverage.
By
Jordan Rau
Los Angeles Times Staff Writer
January 29,
2008
SACRAMENTO — Gov. Arnold Schwarzenegger's audacious plan to arrange
medical insurance for nearly all Californians -- one watched as a potential
model for the nation -- was rejected Monday by the state Senate, obliterating
the chance of anything but piecemeal healthcare changes from the Legislature
this year.
The Senate Health Committee voted down the $14.9-billion
proposal, which would have required people to hold private insurance and
subsidized the premiums for those who could not afford them. The repudiation
came from Republicans and Democrats, with only one of 11 senators backing the
plan that Schwarzenegger and Assembly Speaker Fabian Nuñez (D-Los Angeles) spent
much of 2007 putting together.
Lawmakers called the plan, which passed
the Assembly last month, "fundamentally flawed" and "a fairy tale" as a visibly
frustrated Nuñez, sitting in the committee room, muttered disagreement under his
breath. Senators said the proposal, while laudable in its ambitions, might fall
apart financially in a few years, leaving the state to cancel its new healthcare
services or put taxpayers on the hook for billions of dollars more.
Senators said it was too risky a financial commitment when California
faces a $14.5-billion budget gap that could force them to cut existing
healthcare programs. Schwarzenegger has proposed $2.9 billion in healthcare cuts
over the next 18 months.
"It doesn't matter if there are these good
things in the bill if there isn't the money to pay for them," said Sen. Sheila
Kuehl (D-Santa Monica), who chairs the health panel and has proposed that the
state take over the role of providing medical insurance. "We can't simply say to
the people of California, 'Go buy insurance.' "
The defeat may be a poor
omen for national efforts to overhaul the country's healthcare system. The three
leading Democratic presidential candidates -- Hillary Clinton, Barack Obama and
John Edwards -- all have proposed similar programs aimed at expanding private
insurance while allowing people who have coverage they like to keep it.
No national impetus
Healthcare advocates, including the
powerful Service Employees International Union, had hoped a success in
California would help build national momentum for change. Public opinion polls
show increasing anxiety about the current health system, as more employers shed
coverage benefits and premium costs outpace inflation each year.
At the
same time, new studies have found that Americans lag citizens of many other
countries in their overall health.
Massachusetts, the first state to
require that citizens hold health insurance, has run into $400 million in cost
overruns after more uninsured people than expected signed up for state-supported
coverage.
"This shows how hard it is for states to do this on their
own," said Peter Harbage, a healthcare expert at the New America Foundation who
has advised the Schwarzenegger administration and Edwards. "What you really need
is a national focus and a national leadership to make it happen."
About 5
million Californians lack health insurance. But opposition to the plan, which
Schwarzenegger had tried to sell as one that could unite disparate interests and
politicians, showed how elusive common ground could be. Tobacco companies, Blue
Cross of California and employer groups -- all of which would have had new
financial burdens under the plan -- lobbied against it.
Some unusual
foes
At the same time, some labor unions and consumer advocates who
usually support healthcare reform efforts were put off by the bill, saying it
put too much responsibility on individuals and was a giveaway to private
insurers. They faulted the plan's requirement that everyone have insurance,
saying people would be forced to buy policies with deductibles as high as $2,500
and out-of-pocket costs that could ruin them.
The California Labor
Federation and the California Medical Assn., two groups that were principal
backers of the last legislative effort to overhaul healthcare, which California
voters repealed in 2004, remained neutral this time.
"The Senate saw
several shortfalls for consumers that we agreed needed improvement," said Art
Pulaski, the secretary-treasurer of the labor federation.
The California
Nurses Assn., which advocates abolishing private insurers in favor of a
government-run health program, also fought the measure.
But Wendy
Lazarus, president of the Children's Partnership, an advocacy group based in
Santa Monica and Washington, D.C., blamed the Senate for "a giant step backward"
that ended "the best chance for hundreds of thousands of kids who can't get
basic healthcare coverage today."
Schwarzenegger issued a statement after
the vote calling it a setback and vowing that he would not walk away from
"comprehensive healthcare reform."
"The problems will not disappear," he
said. "In fact, they are likely to get worse."
Backers of the plan said
the senators unfairly latched onto last week's report by the Legislature's
nonpartisan analyst, Elizabeth Hill, that said the plan would run out of money
in five years if it did not work exactly as intended. They noted that Hill
acknowledged that any major makeover of the state's healthcare system entailed
fiscal risks.
"I would challenge the members of the Senate to come up
with a plan that's doable and that can withstand the same type of scrutiny that
AB 1X was put through in this committee, the same kind of analysis by the
legislative analyst, that is going to respond to the needs of those poor
families who have absolutely no healthcare today," Nuñez told the senators
before they voted.
Hope for parts of bill?
Senate
President Pro Tem Don Perata (D-Oakland) said lawmakers could still pursue some
of the smaller provisions of the bill, including a cap on insurers' profits, a
requirement that healthcare providers reveal their costs for procedures, an
increase in the state's tobacco tax to help provide insurance subsidies, and a
levy on hospitals so California could qualify for more federal money.
Such ideas "aren't complex fixes but would be signs of good faith,"
Perata told reporters.
Those changes would also face difficult political
terrain. Republicans have vowed not to support tax increases. And two Democrats
on the Senate health committee, Gloria Negrete McLeod of Chino and Leland Yee of
San Francisco, helped kill previous efforts to regulate insurance companies by
refusing to vote for them. Both voted against the Schwarzenegger-Nuñez bill
Monday.
So did Kuehl, whose state-run insurer bill was vetoed by
Schwarzenegger last year. Three Democrats -- Darrell Steinberg of Sacramento,
Elaine Alquist of Santa Clara and Gil Cedillo of Los Angeles -- abstained. Only
Mark Ridley-Thomas, a Democrat running for a Los Angeles County supervisor seat,
voted in favor of the measure, which he said would have helped many of his
constituents.
All four Republicans -- Dave Cox of Fair Oaks, Sam Aanestad
of Grass Valley, Mark Wyland of Escondido and Abel Maldonado of Santa Maria --
voted against the measure.
Aanestad, an oral and maxillofacial surgeon,
said: "I don't think the status quo is so bad that we need to risk everything
we've done to make medicine in California about the highest standard of care in
the world."
jordan.rau@latimes.com
Times
staff writer Patrick McGreevy contributed to this report.
Copyright 2008 Los Angeles Times