Is California on the Verge...?
For months now, the California health reform process has felt somewhat like the MA health reform process when it was stuck in conference committee between 11/05 and 4/06, except in CA, the deadlock is between Gov. Schwarzenegger and the Senate/Assembly Democratic leadership. This past week, the legislative leaders have publicly advanced a new proposal which may begin to break the deadlock. Check out the website of our friends at Health Access California for the most up-to-date information and analysis. Here are key details from the new plan:
PUBLIC PROGRAM EXPANSION: The proposal include a major expansion of public program and subsidized coverage to low- and moderate-income Californians, and not just to children and parents, but the adults without kids at home. It includes: All children, regardless of immigration status, up to 300 percent of poverty. Parents of those children who are citizens or legal residents (up to 300 percent of poverty) would also receive coverage. Single, childless adults below 250 percent of poverty – many of whom currently can’t afford coverage, but don’t qualify for public programs now at all – would now qualify for Medi-Cal. The proposal also includes streamlining of these programs so that those eligible for the program can more easily get on and stay on. Individuals with incomes between 250% to 450% of poverty would receive a new tax credit to assure that coverage through the purchasing pool would not exceed 6.5 percent of income for overall health care costs.
MINIMUM EMPLOYER CONTRIBUTION: A sliding scale up to 6.5% of payroll. Employers with a payroll higher than $250,000 annually would be required to pay 6.5 percent in health benefits. Businesses with smaller payrolls would contribute on a sliding scale (Less than $100,000 payroll would pay 2 percent for health benefits, between $100,000 and $250,000 would pay 4 percent for health benefits). Employers would have a two-pronged test to ensure that the benefit was being broadly shared among all workers. As part of this two-pronged test, they would have the option of providing private coverage or paying a fee into a statewide purchasing pool for those earning more than $25,000, AND for those earning less than $25,000.
INDIVIDUAL RESPONSIBILITY: All Californians would be required to have coverage as long as the premiums plus out-of-pocket costs do not exceed 6.5 percent of a person’s income. In addition, those within the requirement can apply for a hardship exemption. Those who do not comply would be automatically enrolled in the purchasing pool.
PROVIDER RATES: Would raise Medi-Cal rates, as part of the package with the hospital assessment and the drawing down of federal matching funds for California.
FINANCING: There is a multiplicity of eight different funding sources, including an individual contribution (capped at 6.5% of income), an employer contribution (sliding scale up to 6.5 of payroll), a hospital fee (roughly 4%); federal matching funds; reinvested state savings; better use of the "Section 125" federal tax credit; a $2-per-pack tobacco tax increase; and potentially some contribution from counties as medically indigent adults are covered by the state.
COST CONTAINMENT: A combination of many (but not all) of the ideas from the legislature and the Governor. Requires prevention efforts, transparency so providers disclose cost and quality information, bulk purchasing of prescription drugs, health information technology and a public insurer to compete with private plans.
AFFORDABILITY: For Individuals/families: Assures that the cost of health care (premiums plus deductibles) does not exceed 6.5 percent of income for families up to 450% of poverty ($92,925 for a family of four) For employers: The requirement is scaled to go to 6.5 percent of payroll; many employers pay more now, and will continue to pay more, of their own choosing.
OVERALL COMMENT: While most organizations are waiting for legislative language to be released later this week, Health Access California and some other consumer groups are pleased with the framework as described. It would dramatically secure and expand public program coverage and group coverage for millions of Californians, making coverage more available and affordable in each of the ways that people get coverage-through public programs, on-the-job benefits, or buying it as individuals. The proposal include many elements--on public program reforms, insurance market consumer protections, and cost containment provisions--that if passed in any other year would be a major consumer victory in their own right.
Also, check out the California Health Foundation's website, CalHealthReform.org, for more information. If something like this plan happens, this would be an extraordinary national breakthrough.