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California on the Verge...

California on the Verge...

December 17, 2007

See today's Kaiser Daily Report and the Health Access California blog for details of a rapidly emerging health reform breakthrough in California announced today by Gov. Schwarzenegger and House Assemby Speaker Fabio Nunez. Not in on the party yet is Senate President Pro Tempore Don Perata, who wants details on how the Governator will deal with a $14B budget shortfall before signing on. Key components:

-- New subsidized coverage program for uninsured up to 250% FPL;
-- Tax deductions to finance coverage for those 251-400% FPL, with 5% of income cap;
-- Pay-or-Play Employer payroll tax -- 1/6.5%, depending on employer size;
-- Individual mandate;
-- $1.50 or $2 cigarette tax;
-- 4% hospital revenue tax (to be offset by new federal revenues);
-- Elimination of medical underwriting by health insurers;
-- And a whole lot more.

Because of the CA constititional requirement that new taxes require a super-majority, and because not one Republican Senate or Assembly members will support the deal, the Legislature will not vote on financing. The financing needed to make the deal work will be put before the voters in November 2008.

The tobacco tax will almost certainly draw major tobacco industry financing to defeat the ballot initiative. The employer assessment will certainly draw major opposition from many parts of the business community -- on the ballot, and most likely in federal courts on ERISA grounds if the ballot initiative prevails.

Hey, it's kinda like an action movie.

No mistaking it, if this happens, it's huge ...