We live to fight another day for drug discounts...

Friday, May 23, 2008

Wednesday morning, without taking testimony, the Senate Budget Subcommittee chaired by Senator Elaine Alquist, with Senator Alex Padilla concurring, voted to eliminate funding for the drug discount program.

At noon time, I came back to the office and looked at the blog post by my colleague, Hanh Quach, with that wonderful picture of Governor Schwarzenegger signing the bill, framed on either side by supporters including Anthony Wright, Health Access executive director, and Assembly Speaker Fabian Nunez, who stepped down from that position a week ago yesterday.

I found it hard to believe that only a week after Nunez had stepped down as Speaker, the Assembly would just agree with the Senate and eliminate funding for the drug discount program that every article on his tenure as Speaker cited as one of his major accomplishments.

At 1:30pm, I found out I was wrong. The Assembly Budget Subcommittee convened and we discovered that they too planned to eliminate funding, in the technical language of the legislature, “conforming” to the Senate action. Things can move quickly around the Capitol.

I noticed that somehow the drug companies had found out that they were about to win a delay in this program that they had fought so hard to stop—I saw several of their lobbyists in the back of the hearing room.

Fortunately, the Assembly Budget Subcommittee allowed public testimony. Bill Powers, advocate for California Alliance of Retired Americans (CARA), and I spoke. I pointed out that Health Access had sponsored a ballot measure that Pharma spent $80 million to defeat and that the law was a compromise based on the Legislative Analyst Office (LAO). Consumers and labor supported the law, Pharma bitterly opposed. I said we strongly opposed not funding the program.

Bill Powers spoke about the travesty of the Medicare drug program where Medicare cannot negotiate prices with the drug companies. He pointed out that the State of California negotiates with drug companies for both Medi-Cal and for this new program for the uninsured. Medi-Cal gets very good prices from the drug companies—that is why they opposed this new discount program. If we don’t get the new program, Bill said, we will never know for sure how much we can benefit the uninsured.

And rare in what all too often feels pre-scripted, Assemblymember Patty Berg, the Budget Sub chair, moved to hold the item open, postponing action to another day. The Democrats present, Assemblymembers Jim Beall and Ed Hernandez, concurred. I was so relieved I forgot to notice what the Republicans did.

So we still have a chance to win. But it is a slim one. At any time, the Assembly could agree with the Senate and consumers will be out of luck on drug discounts and the drug companies will have won through the backdoor because of the bad budget year. It seems a poor tribute to the work Speaker Emeritus Nunez has done on health care.

Labels: Budget, Drugs, Nunez, Perata, Schwarzenegger

posted by Beth Capell | Permalink | 10:13 AM


 

In case you missed it...

Friday, February 01, 2008

Some editorials after ABx1 1 failed to pass Senate Health Committee

Sacramento Bee
San Francisco Chronicle
Los Angeles Times
Sen. Mark Ridley-Thomas, the only "aye'' vote on committee on why he voted in favor in the LA Times

Labels: InTheNews, Nunez, YearOfReform

posted by Hanh Kim Quach | Permalink | 5:14 PM


 

Pulling on the boxing gloves

Monday, January 28, 2008

The debate over ABx1 1 is being slugged out in today's editorial pages:

In the anti-ABx1 1 corner, we have:

• The California Nurses Association with two op eds, one in the Sacramento Bee and one in the Mercury News, ruing
• The Foundation for Taxpayer and Consumer Rights in the Sacramento Bee, bemoaning the use of an individual mandate and continuing its crusade for rate caps.

In the pro-ABx1 1 corner, we have:

• The American Cancer Society in the Mercury News explaining how fewer people could die of cancer if they were insured
• Assembly Speaker Fabian Nunez rebuts arguments made by Sen. Sheila Kuehl in the LA times last week.
• Finally, the LA Times editorial board encourages the Senate Health Committee to pass ABx1 1

Labels: InTheNews, Kuehl, Legislation, Nunez, Schwarzenegger, YearOfReform

posted by Hanh Kim Quach | Permalink | 10:17 AM


 

Bad Bosses

Wednesday, January 23, 2008

Sen. Sheila Kuehl just raised a good question, which is how ABx1 1 would handle businesses that "misclassify" or "reclassify" their workers as "independent contractors'' in order to avoid the employer mandate.

This is also known as the underground economy.

SEIU's Beth Capell responded:

Existing law – Unemployment Insurance Code Section 2101 – already addresses issues surrounding the “underground economy.’’ Specifically, the law says businesses cannot “willfully make a false statement or representation’’….that would reduce a worker’s “benefit or payment.’’

An employer that does so, would be fined $20,000 and could spend a year in prison, as provided under UI Code Section 2122.

California’s Economic Development Department has a division specifically dedicated to pursuing and punishing businesses that evade payroll obligations, and in recent months has pursued, arrested, fined, and imprisoned a number of businesses. ABx1 1 would be one of those obligations.

Additionally, Capell added that Kuehl's own SB840 did not include penalty provisions, but would also -- if passed -- be an employer obligation enforceable under this code section.

Labels: Kuehl, Legislation, Nunez, YearOfReform

posted by Hanh Kim Quach | Permalink | 4:29 PM


 

Vote on Monday

After today's LOOOOOONNNNNNNGGGGGG hearing on ABx1 1, Senators will be able to go home, think about the bill, be lobbied, and return on Monday afternoon to vote, Chairwoman Kuehl said.

Labels: Kuehl, Legislation, Nunez, YearOfReform

posted by Hanh Kim Quach | Permalink | 1:37 PM


 

Failure to comply with mandate

Many senators are asking about what would happen to those Californians who fail to -- or are unable to -- comply with the mandate.

It's a good question and it's a concern that has spun many rumors about some faceless bureaucrat -- knocking at your door, garnishing wages, putting liens on your house.

Here's the real scoop: ABx1 1 says nothing about this kind of enforcement. Additionally, such behavior by a state agency (ie. Franchise Tax Board) would not be permitted until

• a) the Legislature approves legislation on that issue and
• b) the Legislature approves funding for enforcement, which is unlikely given the existing funding shortfall.

What ABx1 1 does say is if a person does not have coverage after 62 days, they will be told of different options where they could find coverage (public programs, the state purchasing pool). If the individual does not act, they will be automatically enrolled in the least expensive policy. The state will then recover the costs of that coverage through the Franchise Tax Board, but no additional penalties are exacted.

Labels: IndividualMandate, Kuehl, Legislation, Nunez, YearOfReform

posted by Hanh Kim Quach | Permalink | 1:33 PM


 

Who dies when?

Sen. Darrell Steinberg and Elaine Alquist have rightly focussed on what happens to previously uninsured Californians, who obtain coverage through health reform, and then are cut off if the revenues for the program go south -- causing health reform to "trigger off'' and revert to the "status quo'' -- which means newly uninsured Californians are uninsured again.

This is particularly troubling if a person is in the middle of treatment for cancer.

Sen. Alquist raises this point:

“I’m hearing about safety valves to the state, but not safety valves for the
consumer. There will be people who die because they can’t get treatment during
that 12 or 14-month period’’ during which time health reform is “turned off.’’

But Health and Human Services Secretary Kim Belshe responds that people are dying now -- without coverage, and without this bill.

"I want to underscore a fundamental reality. People are dying
today because they don't have insurance. Lack of insurance means lack of
access. Lack of access means diminished health outcomes. Diminished health
outcomes mean people die.''

Labels: Legislation, Nunez, Schwarzenegger, YearOfReform

posted by Hanh Kim Quach | Permalink | 10:54 AM


 

"The Status Quo is not an option"

The "most thorough hearing'' on ABX1 1 has begun. You can listen to testimony in the Senate Health Committee throughout the day here, and click on Room 4203.

Secretary of Health and Human Services is now giving her opening remarks on the legislation, following Assembly Speaker Fabian Nunez. Both have emphasized the need to reform the system -- now. Both admit that while this bill may not be perfect, the fall back is the status quo.

"Voting for this bill makes greatly needed progress. Voting against the bill is keeping the status quo,'' Nunez said. "Keeping the status quo does harm. Keeping the status quo tells the uninsured -- who live sicker and die younger -- that they have to wait. Keeping the status quo tells 800,000 kids they have to wait. "

Labels: Kuehl, Legislation, Nunez, Schwarzenegger, YearOfReform

posted by Hanh Kim Quach | Permalink | 9:34 AM


 

State of the Reform...

Wednesday, January 09, 2008

Speaker Nunez mentioned health care in his response to the State of the State. Senate President Pro Tem Perata did not. Here's Nunez:

And no conversation about where the state should be headed can be complete without acknowledging the overwhelming need to fix the state’s broken health care system.

California families face a fiscal emergency every time they struggle to pay for health care. And our overburdened emergency rooms face a fiscal crisis every day. The health care reform we negotiated with the governor takes a giant step toward the universal coverage that Californians want.

And we wrote the plan specifically so it wouldn’t impact the state budget or add to any deficit. Seizing this historic opportunity can provide one of the bright spots on a tough road ahead.

Labels: Nunez, YearOfReform

posted by Anthony Wright | Permalink | 12:04 AM


 

Ballot beginnings...

Friday, December 28, 2007

We hear that Governor Schwarzenegger and Speaker Nunez are filing the initiative with the financing for AB x1 1 today. We'll post more when we have more.

Labels: Nunez, Schwarzenegger, YearOfReform

posted by Anthony Wright | Permalink | 1:38 PM


 

Comparisons...

Friday, December 21, 2007

The most surprising aspect of the critiques of the proposed health care reform, AB x1 1 (Nunez), by Senator Sheila Kuehl and Mayor Gavin Newsom is that they both came out first in the blogosphere.

After all, both these Democratic politicians, along with the active critics from the Republican legislative delegation, are authors of their own health care plans. Senator Kuehl has SB840, and Mayor Newsom has Healthy San Francisco. They are excellent reforms--Health Access California supported and worked very hard for both health reforms last year, getting Healthy San Francisco passed and implemented, and SB840 on the Governor's desk.

But we don't think it is an either/or situation. As Mayor Newsom indicated, "we all need to understand that building a workable Single Payer system will take time," and that he could support "interim steps" to that goal.

Some of the critiques are overstatements ("nothing is provided"? a few million more folks with Medi-Cal coverage might disagree). Some are misreadings of the bill, but it's good for these to be pointed out, so that the issues are addressed with clarifying language. (We'll address specific points from these and other critiques in another post.) We at Health Access California are seeking some similar assurances ourselves. Other suggested changes are things we directly support (such as expanding public program coverage to undocumented adults, or increasing subsidies further), but are constrained by political or financial pressures.

I agree with one of the themes of both posts, which is that AB x1 1 is not "universal" coverage. It's a major, comprehensive health reform that will help millions, expanding coverage for the uninsured (particularly low-income Californians) while providing more security and savings for those with coverage. Maybe it should be called "near-universal." But that's a big improvement from the status quo.

And the comparison isn't with the Kuehl or Newsom plans, but with the status quo.

And as Timm Herdt wrote in the Ventura County Star, the status quo is simply not acceptable, and no one defends the current system.

Labels: Legislation, Nunez

posted by Hanh Kim Quach | Permalink | 12:11 PM


 

More on the debate...

Tuesday, December 18, 2007

HEALTH ACCESS UPDATE
Monday, December 17, 2007


ASSEMBLY PASSES HISTORIC HEALTH EXPANSION AND REFORM PROPOSAL

* Agreement between Governor Schwarzenegger and Speaker Nunez passes first hurdle
* Proposal would extend health coverage to nearly 4 of 5 million uninsured Californians.
* Would be largest expansion of coverage since the creation of Medicaid and Medicare.
* Latest amendments include tax subsidies for families earning up to $82,600 (family of four) to help buy coverage, and for early retirees not yet eligible for Medicare.

New on the Health Access WeBlog: More on the Assembly vote and reaction; Sen. Perata's LAO request; Analogies; More on the content on AB x1 1. Budget blues.


The California state Assembly Monday, on a 46-31 party line vote, approved an historic expansion of health care, which could ultimately provide health coverage to more than 95 percent of California residents.

“California is taking a giant step forward,’’ said Gov. Arnold Schwarzenegger, calling the Assembly’s passage of AB x1 1 “courageous.” Schwarzenegger spoke at a news conference flanked by Assembly Speaker Fabian Nunez and a phalanx of Democratic Assembly lawmakers. Also present were “groups who normally are opposed to one another” -- representatives from a broad range of health care interests: from small businesses, large businesses, physicians, labor unions, consumer groups, community of color organizations, hospitals and insurance companies.

AB x1 1 (Nunez/Perata) is the latest measure of nearly a half a dozen comprehensive health reform measures introduced in Schwarzenegger’s so-called “Year of Health Reform.’’

Schwarzenegger, over the past five years has vetoed or opposed major coverage expansions, including children’s coverage, single-payer universal coverage and an employer mandate. However, this year, Schwarzenegger and legislative leaders volleyed bills back and forth all aimed at reducing the ranks of uninsured in California , numbering up to 5.1 million continuously without coverage. Nearly one year after Senate Leader Don Perata and Nunez introduced separate health reform packages, legislative leaders and the governor have agreed on a package in AB x1 1.

WHAT’S IN THE BILL: In a nutshell, ABx1 1 does the following:

For individuals:
* Expands public programs to all children below 300% of poverty ($62,000 for a family of four) and their parents.
* Expands coverage to parents and adults without children at home to 250% of poverty ($25,525 for an individual; $34,225 for a couple).
* Increases the reimbursement for providers who care for Medi-Cal patients.
* Extends tax credits to families between 250% and 400% of poverty (up to $82,000 for a family of four), so that the cost of coverage does not exceed 5.5% of income.
* Extends tax credits to early retirees with higher incomes could also receive tax credits, as adults between ages 50 and 64 have the highest health care premiums because of their age and health status.
* Allows every Californian to purchase health coverage without being denied because of “pre-existing’’ conditions.
* Requires every Californian to have health coverage, unless by appeal to the state, they can show that the cost of health coverage would pose a financial hardship.

For employers:
* Requires businesses to spend between 1% and 6.5% of payroll on health coverage for workers.
* Requires businesses to set up Section 125 cafeteria plans, which enable employees to use pre-tax dollars to pay for premiums.
* Creates a statewide purchasing pool that they can pay into (rather than buy separate coverage), allowing the state to negotiate large group rates for their employees.

In the health care industry:
* Imposes new rules on insurers, requiring them to provide coverage to all Californians, regardless of pre-existing conditions.
* Requires health plans to dedicate 85 cents of ever premium dollar toward patient health services.
* Requires strategies to rein in health care costs, including disclosure of cost and quality information by providers, bulk purchasing of prescription drugs, preventive care and chronic disease maintenance, electronic health records and the creation of a public insurer to compete with private health plans.

ABx1 1 would not take effect until an accompanying ballot measure is passed by voters in November 2008. That measure would contain many of the measures that would pay for the $14 billion program – including:
* 4% hospital provider fee, that would bring in federal matching funds
* Employer contribution of between 1% to 6.5% of payroll
* Tobacco tax of between $1.50 and $2 per pack.
* Counties share of caring for medically indigent.

To read a more detailed analysis, click here.

ABx1 1 was heard in Assembly Appropriations committee before being voted on by the full house.

SUPPORT AND OPPOSITION:

Those supporting the measure in Appropriations Committee was the Service Employees International Union (SEIU), 100% Campaign of children's groups, AARP, Kaiser Permanente, the American Cancer Society, Health Net, Blue Shield, American Federation of State, County and Municipal Employees (AFSCME), and Carpenters Union.

Other consumer and community groups appeared at a press conference with the Governor and the Speaker at the end of the day. (Click here to read Health Access' "support if amended" letter on ABx1 1).

Taking no position on the measure was the California Labor Federation, which said it did not have time to adequately analyze and weigh the bill and was reluctant to take a position on the measure without seeing ballot initiative language. They emphasized that they were not opposed, as had been reported. California Federation of Teachers and the State Building Construction Trades echoed those concerns.

Opposition that testified in committee included the California Nurses Association, a representative of the UFCW and Teamsters unions, a representative of the CA School Employees Association, the National Federation of Independent Businesses (NFIB), and Blue Cross of California, the state's largest insurer and longtime opponent of reform this year.

COMMITTEE DEBATE: With recent news about a $14 billion project deficit for the fiscal year, many lawmakers questioned whether this was the right time to pass such an expansive reform.

To such inquiries, Nunez and the Department of Finance both said the bill was “revenue neutral,’’ meaning that while the entire program would cost approximately $14.4 billion, it would bring with it its own sources of money (seven of them) from employers, workers, the federal government, tobacco taxes, hospitals, counties and state savings totaling $14.56 billion, which would cover the costs of the program.

Republican Assemblywoman Mimi Walters asked Nunez and the Department of Finance whether they were certain financial projections would come through. AB x1 1 relies on $4.5 billion in federal dollars in addition to other revenue sources. Department of Finance staffer Tom Sheehy said one provision in ABx1 1 would not be implemented unless the Director of Finance declared that money to pay for the program was in hand and in state coffers.

Assemblyman Mark Leno, Democrat chairman of the Appropriations committee, followed up with questions about whether the program could be turned off if money did not come in as expected. Nunez’ staff responded that ballot initiative would contain provisions to assure that insufficient funds would trigger a series of events to pull back the program, including the individual mandate and the market reforms. It would first allow the governor and legislature to fix any fiscal imbalances. If lawmakers and the governor did not act, then the pieces of the legislation would be repealed, including the public program expansions and tax credits, returning the state to the status quo.

Nunez also emphasized that ABx1 1 could be amended by future legislatures on a majority vote should unintended consequences arise, or more direction or clarification is needed for the state board that would be in charge of implementing the program.

Democrat Assemblyman Jose Solorio said he was worried about consumers who would be required to buy coverage, but unable to afford it. Nearly 90 percent of uninsured Californians earn less than 400% of poverty, according to the California Health Interview Survey. Nunez assured him that the vast majority of the Californians who would be newly mandated to have coverage under his plan would be receiving state subsidies (as tax credits) or enrolled in public programs, which have low premiums and cost sharing. Additionally, families will be able to ask for an exemption from coverage if it would create a financial hardship.

Republican Assemblyman Doug LaMalfa asked how many undocumented immigrants would benefit from this plan. In this plan, all children – regardless of immigration status – would receive coverage. But workers whose employers paid into the system would receive benefits, said Nunez, who said he didn’t want the state program to become an arm of the federal government’s immigration department.

Assemblyman Ted Lieu explained why he needed to vote for ABx1 1. “The relevant question is, ‘Does this bill do better than the status quo?’ The status quo is not working for millions and millions of people.” The status quo, for one of Lieu’s constituents, means a slow death from cancer. Linda, Lieu’s constituent, works, but does not receive health care through work. Her daughter, at age 18, cannot buy health care because of a prior heart condition. And now the constituent, herself, has been diagnosed with cancer. “What is horrific is that in one of the most advanced civilizations, we let people like Linda waste away. At the end of the day, this bill is going to save lives. For people like Linda, I look forward to going to her and saying, ‘Help is on the way.’’

Leno, from San Francisco, remarked that he would prefer a single-payer universal health care system, as has been introduced and passed nearly every year for the past five years in SB840 (Kuehl). The governor, however, vetoed that bill last year, and has promised to do the same if it reached his desk again. “My internal debate is, knowing that the governor is not going to sign a single payer bill, should we sit on our hands and say, ‘we tried?’ when we have stories of people in our districts suffering on a daily basis? Do we wait for the perfect? Or do we do something in the meantime. We will have the opportunity to make fixes in the years to come,’’ said Leno whose committee passed the bill on a party line vote.

FLOOR DEBATE: Debate on the Assembly floor echoed debates of the past year. Republicans continued to question why their proposals for Health Savings Accounts were not a proper mechanism for reform (even though they promote high-deductible plans and underinsurance) and conjured up the image of health care rationing in countries with single-payer systems--which AB x1 1 is not. Democratic legislators made the case for action immediately. More on the floor debate will be posted on the Health Access WeBlog.

PROCESS: The Legislature could not fully pass the financing elements of ABx1 1 because Republicans in the Legislature have – for most the past decade – signed a pact against “increasing taxes.’’ They view the hospital fee and employer contribution as taxes, as well as the tobacco tax. Because of that constraint, supporters of this measure will have to collect signatures and put the financing of this proposal on the ballot.

In order to have enough time to collect signatures by June for the November ballot, such a ballot measure, as a companion to ABx1 1, would need to be submitted to the Attorney General's office in the next few weeks.

For a read of this year’s health care debates, visit
http://www.health-access.org/labels/Updates.htm.

Labels: Legislation, Nunez, Schwarzenegger, YearOfReform

posted by Anthony Wright | Permalink | 1:53 AM


 

A first look at the new legislation...

Friday, December 14, 2007

HEALTH ACCESS UPDATE
Friday, December 14th, 2007


NEW AMENDMENTS TO HEALTH REFORM RELEASED
* Governor, Assembly Speaker Continue Negotiations
* Possible Vote Next Week; Deadline Nears for Going to November 2008 Ballot

New on the Health Access WeBlog: More on the Special Session; State Budget Blues; Blue Shield and Health Net Fines; Tobacco’s Revenge; Louise Jones, RIP; The Clinton-Obama Mix-Up on Mandates; Transparency; ER Overcharging; 90 Years of Health Reform History; Why We Can Win at the Ballot; MRMIB and SCHIP Update; A $1.2 Million Hospital Bill; The Need for a Safety Valve; Health Systems in Other States and Countries; Cost Containment; Middle-Income Uninsured; The Light at the End of the SCHIP Tunnel?; Presidential Plans That Don’t Even Help the Candidate; Cultural Competency; A Fortune on Health Reform?; Attack Ads Already?; Health Wonkery…


In the December of the “year of health reform,” there are continued negotiations by Governor Schwarzenegger, Assembly Speaker Nunez, and others to see if there is an agreement on a comprehensive health proposal that can be considered by the Legislature, starting with the Assembly on Monday.

Yesterday, Speaker Nunez convened an Assembly Democratic Caucus to brief Assemblymembers on the progress with negotiations. Some of the agreed-upon amendments to the current vehicle, AB x1 1 (Nunez), were released today, and more amendments are expected on Monday. The full text of the bill is available at: http://www.leginfo.ca.gov/cgi-bin/postquery?bill_number=abx1_1&sess=CUR&house=B&author=nunez

PROCESS: Even if an overall agreement can be worked out, that is the beginning, not the end, of this health reform effort. An agreement would need to go through the legislative process, perhaps starting with a vote in the Assembly on Monday. It is unclear when the Senate would vote on the measure. Senate President Pro Tem Don Perata has indicated he wants to review issues around the growing budget deficit because committing to a health reform effort.

It is expected that some or all of the proposal would not be enacted unless a companion ballot measure that included the financing for the proposal passes in November 2008. Ballot measures are usually filed before the end of the year preceding a November election to allow appropriate time for signature collection.

The legislative proposals by the Governor and the legislative leaders have many similarities, and the most recent weeks have seen several issues get closer to being resolved. The amendments released today confirm that.

This is a preliminary analysis. Health Access will continue to put out information and commentary on this proposal as it becomes available, in fact sheet form and on our blog, at www.health-access.org/blogger.html.

OPEN ISSUES REMAIN: However, there are still remaining open issues—and ones that will determine the support or opposition of many stakeholder groups. Also, language has not been drafted for the companion ballot measure.

They are the issues that provide confidence that the reform is workable and pencils out; and that determine whether a proposal would provide a benefit or a burden to many California consumers.

AREAS OF AGREEMENT: There continue to be major areas of agreements in concept, although with important details continuing to be worked out. In any compromise being discussed, the proposal would include several major steps forward in making coverage more available and affordable for Californians:

* The biggest public program coverage expansion since the creation of Medicare and Medicaid 40 years ago.
* The proposal would expand Medi-Cal and Healthy Families to lower-income children, parents, and even adults without children at home who currently have no access to public program coverage. All children up to 300% federal poverty level would be guaranteed coverage; the coverage expansion for adults goes up to 250% FPL (around $25K/year for an individual, or $50K for a family of four).
* The proposal would also streamline these programs so that they are easier to get on and to stay on. This includes the elimination in Medi-Cal of the depravation test, and the asset test.
* The proposal would improve these programs by increasing Medi-Cal reimbursement rates, so even the six million Californians on Medi-Cal now have better access to providers.
* Mentioned in the bill and expected in the ballot measure is additional financial assistance, through tax credits and/or subsidies, for people from 250-400% FPL (up to $80K for a family of four), and for early retirees of higher incomes, but who have particularly high premiums.

* The establishment of a minimum employer contribution for health care, of the similar import to the creation of a minimum wage 70 years ago. Providing more security the majority of Californians who get employer-based coverage but who are concerned about losing it, the bill would sets a standard for a minimum employer contribution to spend a percentage of payroll on health benefits, either by paying into the purchasing pool or by expending the funds on health insurance or other health benefits. (This section is proposed to go into the ballot measure rather than the bill, and there’s no specification, but the belief is that the minimum employer contribution would be a scaled amount up to 6% or 6.5% of payroll for most larger employers.)
* This statewide purchasing pool could create a new affordable option for employers to cover their workers, initially for employees and dependents of employees that choose to use the purchasing pool. The pool would offer subsidized coverage for all workers of employers who pay into the pool.

* New oversight over the insurance industry would especially help individuals and small businesses who don't have the market power of large group purchasers of coverage. The proposal would have:
* Reforms of the individual insurance market so that coverage is available to anyone who wishes to purchase it, by establishing “guaranteed issue” rules to prevent insurers from being able to deny people based on “pre-existing conditions.” The guaranteed issue would start immediately; “community rating” rules to prevent insurers from pricing people differently because of health status would be phased in fully in four years. There would also be a limit, determined by regulators, to the difference that insurers could price on age.
* An organization of the individual insurance marketplace, so all insurance products get classified in five tiers, with benchmark plans in each, to allow consumers a better sense of the value of the product they are buying, and to facilitate price and benefit comparisons.
* Other efforts, including reinsurance and risk adjustment, to ensure than insurers compete on price, quality and service, rather than on avoiding people who may actually need care.
* A requirement that premium dollars go to patient care, and a 15% limit on the percentage of premium dollars that an insurer collects go to administration, marketing, and profit.
* Some reforms of the small group market, extending protections that now exist for those small businesses up to 50 workers to mid-size employers with up to 100 employees as well.

* A more secure and more fairly financed health system would be bolstered through shared responsibility from multiple different funding streams, including minimum employer and individual contributions, reinvested country and state savings from public program expansions, a hospital fee, a unspecified tobacco tax, and strategies for bringing in California's fair share from the federal government, to:
* Bring in almost five billion dollars in new federal matching funds to California ’s health system, by getting matching Medi-Cal funds for these expansions of public programs and employer contributions.
* Offer workers new tax savings, by providing the ability to pay premiums, or share-of-premiums, with pre-tax dollars through Section 125 plans, for a savings of 15-40%.

* Several cost containment strategies, which, working together, can slow the growth in health costs. The coverage expansions and financing provisions will help, by themselves, reduce the "hidden tax" that results from not having all employers provide coverage to their workers, and for having the uninsured go without cost-saving preventative care. Other cost-control efforts would include:
* Preventing Californians from getting sicker by helping patients to affordably treat chronic diseases such as asthma and diabetes.
* Funding “community makeover” grants to build healthier neighborhoods.
* Requiring transparent public reporting on health care costs, and the quality of services, which would enable health purchasers and consumers to make wiser decisions about their care and the best way to spend their money.
* Requiring the adoption of health information technology, which could help avoid duplication and costly errors; and encouraging E-prescribing.
* Helping foster public insurer options for consumers out of county efforts, allowing these low-overhead, not-for-profit agencies to have regional networks and better compete.
* Allowing bulk purchasing of drugs for the new purchasing pool.


OUTSTANDING ISSUES: Consumer advocates, including Health Access California , are reviewing the proposal; it is clear that there are many elements of the proposals that we have long advocated for; that we didn’t get everything we wanted, and we need to see if we get everything we need.

While millions of both insured and uninsured Californians would be helped by this framework, there’s still a need to review the whole proposal—including the ballot measure—to ensure that no group of consumers is worse off under the proposal. Many consumer groups have adopted a “do no harm” standard.

* THE INDIVIDUAL MANDATE AND AFFORDABILITY continues to be a major issue of negotiation. The measure does have an individual requirement to have coverage, with a combination of public program expansions and subsidies, as well as affordability and hardship exemptions. Many consumer, consumer, and constituency organizations insisted that any requirement to have coverage needs to have protections to ensure the availability and affordability of such coverage, and will need to evaluate the proposal in this light.
* The amendments would expand public programs up for children, adults, and families up to 250% of the federal poverty level ($25K for an individual, $50K for a family of four) for those who qualify; the mandate effectively exempts those under 250% who do not qualify for those public programs.
* Those without employer-based coverage between 250-400% FPL would have the ability to go to the purchasing pool and get a tax credit/subsidy to assist with getting coverage. The mandate is contingent on these subsidies.
* Over 400%FPL ($40K/year for an individual; $80K for a family of four), there may be subsidies available for early retirees (who by virtue of age have some of the highest premiums).
* There would be a process at the MRMIB board to provide temporary and permanent exemptions to the mandate based on affordability and hardship.
* Benefits and cost sharing of the coverage offered are different depending on income. Those in public programs up to 250% FPL have fairly comprehensive benefits and low-cost sharing similar to Medi-Cal or Healthy Families. In the individual market and the purchasing pool, regulators would organize and “tier” the market, setting a minimum benefit that everybody would have to buy, that would include doctor, hospital, and preventative care, as well as four tiers of products above that minimum that people could purchase from.

These issues of affordability also have an impact on the finalizing of individual insurance market reforms, particularly the requirement on insurers to provide guaranteed issue. Both the Governor and the legislative leaders have been committed to reforming the market so that people with “pre-existing conditions” have access to buy insurance. But insurers balk at any exemptions that would allow sicker people to get coverage but allow healthier people not to contribute. By extending the subsidies and narrowing the affordability standard, few people would be exempted at first, allowing all those in the individual market to have guaranteed issue.

Another outstanding issue is one of a “safety valve,” to protect people from the mandate in the future with government shortfalls or rising costs. While the vast majority of uninsured would be significantly helped in meeting the requirements of the mandate, at biggest risk are some middle class Californians just over 400% FPL. They do get some benefit: this population would have guaranteed issue access to products, and most workers will have access to a Section 125 plan to get a significant discount (potential 20-40%) off of a premium by using pre-tax dollars. The vast majority of those already have insurance—less than 15% of the uninsured is over 400%FPL. However, if health costs rise, they will need either additional help or subsidies, or greater need for exemptions from the individual mandate. New language includes a periodic evaluation of the program.

* PURCHASING POOL STRUCTURE: There continues to be an issue about the financing of the pool. Most of the attention has been about the exact level of the employer contribution: the Legislative leadership has a 6.5% minimum employer contribution; the Governor has a 5.5% level. Both also have lower levels for some small businesses with differing definitions of “small” business, between $250,000 and $1 million in payrolls: both the levels and the cutoffs remain the subject of discussion.

The pool would include those who have public program coverage up to 250% of the federal poverty level; those who are eligible for a tax credit or subsidy between 250-400%, as well as early retirees; and all workers of those employers who pay the fee. It also includes other workers whose employer chooses to set up a Section 125 plan through the pool.

* FINANCING: While there’s substantial agreement on these elements of a health reform proposal, there is not language on a proposed companion ballot measure, which would include much of the financing. The ballot measure is likely to include the substance of the employer fee, the hospital fee, the county share-of-cost, and probably a tobacco tax of some amount.

Obviously, the more subsidies that are needed to make coverage affordable, the more financing that is needed. With additional financing, it would be possible to use this framework to improve the benefits for low- and moderate-income families, and to extend subsidies beyond 400% FPL.

FUTURE FIGHTS: Other items of interest for health advocates would also be left for future discussion, either in the next few days, or in future regulatory or legislative arenas. Insurance regulators, for example, will determine the variation allowed for insurers to be able to charge premiums based on different ages. And then there’s other possible legislative additions: for example, there’s significant interest by some advocates in allowing the self-employed to be able to use the purchasing pool, but there was not enough time to develop the concept.

DETAILS TO DISCUSS: Many organizations are waiting to see the rest of the proposal, most particularly the ballot measure with the financing, as well as the second round of amendments to this bill that are expected to come out early next week. The bill also includes some language that remain “open issues” between the Governor and the Speaker, so it continues to be subject to change.

INITIAL OVERALL COMMENT: This is a framework that would provide significant help to the vast majority of Californians in getting coverage they need and want, both for the insured and uninsured. While it includes many elements that health and consumer advocate have long fought for, we continue to seek more assurances about affordability for consumers, especially for very specific populations. Consumer and health advocates will be vigilant in reviewing additional amendments and the ballot measure on behalf of California patients. However, with the rapidly deteriorating status quo in health care, the urgency for reform is real for millions of Californians.

Labels: Legislation, Nunez, Schwarzenegger, Updates, YearOfReform

posted by Anthony Wright | Permalink | 12:37 PM


 

It's public....

Legislative language agreed to by the Governor and legislative leaders is available now. Click this link if you want the full 220 pages.

Labels: Legislation, Nunez, Schwarzenegger, YearOfReform

posted by Hanh Kim Quach | Permalink | 9:41 AM


 

One more time, with feeling...

Thursday, November 15, 2007

HEALTH ACCESS UPDATE
Thursday, November 15, 2007


HEALTH REFORM BILL ADVANCES IN SPECIAL SESSION
* Assembly Health Committee passes Democratic leadership’s health measure, ABX1 1
* 60 witnesses testify for over three hours
* Floor vote set for week after Thanksgiving

New on the Health Access Weblog: More on the Hearing; How the Budget Crisis Impacts Reform; Reporter Snarkfest; Crossing Off the Gov's AB8 Veto Reasons; The Gov's Counteroffer; Bonuses for Retroactive Denials?; Initial Reaction's to Nunez's New Proposal;


For another time this year, the Assembly Health Committee Wednesday passed comprehensive health reform legislation aimed at expanding coverage to a significant swath of California’s 6.5 million uninsured. The newly reconstituted Assembly Health Committee voted on the first health reform bill of the special session, ABX1 1 (Nunez/Perata) and vowed to send the bill to its Senate counterpart by the end of the month. The bill passed on a 10-5 party-line vote.

The committee also rejected a Assembly Republican promote, AB X1 8, which opponents said would decimate the state’s HMO Patient Bill of Rights and other consumer protections, and promote high-deductible health plans through Health Savings Accounts, leaving more people underinsured in the state.

AB X1 1 goes beyond the ideas layed out in the previously passed – and vetoed -- AB8 (Nunez/Perata) and Gov. Arnold Schwarzenegger’s own health care proposal, formally released and debated last month. In spite of its many iterations, Assembly Speaker Fabian Nunez stressed that ABX1 1 is still a work in progress. “What you have here is not a perfect document, but I would ask everybody to always compare it to the current health care system,’’ he said.

To get a more comprehensive analysis of what’s in ABX1 1, click here. In summary, ABX1 1 would:

* Significantly expand public programs to include:
* Children and parents up to 300% of the poverty level ($61,950 for a family of four),
* Childless adults up to 250% of the poverty level ($25,525 for an individual),
* And tax credits for families between 250% and 450% of poverty to help ensure that the cost of health care does not exceed 6.5% of income.
* Establish a minimum employer contribution of 6.5% for businesses with higher than a $250,000 payroll. Businesses with a smaller payroll would pay less.
* Require all Californians to have health coverage, as long as it was “affordable.’’ “Affordable” means that a family pays no more than 6.5 percent of its income on premium and out-of-pocket costs.
* Require insurance companies to sell coverage to every Californian, spend 85 cents of every premium dollar on health care and prohibit companies from charging sicker enrollees higher rates.
* Create a state-run insurance purchasing pool that would allow Californians to benefit from group negotiated rates.
* Contain the underlying costs of healthcare through public disclosure of cost and quality, bulk purchasing of prescription drugs, and the offer of a public insurer option.
* Establish a $2-per-pack tobacco tax and 4 percent fee on hospitals, in addition to federal, local, employer, and individual contributions to pay reform.

DEBATE AND DISCUSSION

Many Republicans raised the concerns expressed by business interests. Some raised the specter of the Employee Retirement Income Security Act, ERISA, which bans states from explicitly dictating how businesses spend money on specific health benefits. Others also worried that small businesses, working on thin margins, would not be able to afford the coverage.

“Small businesses are saying the 2% fee (on a payroll of less than $100,000)would harm them. They tell me they’ll lose 295,000 jobs,’’ said Assemblyman Alan Nakanishi, R-Lodi.But Nunez said the plan falls apart otherwise. “The only way we can make this work is if everyone has a role,’’ he said.

On the ERISA question, Nunez responded: “We’ve had a roomful of lawyers who have been working with us …we’re not asking employers to pay for specific health care services.’’ Nunez is referring to ERISA provisions that say states can’t prescribe benefits packages, as multi-state companies would need to adjust health coverage from state to state to meet different mandates. (For one take, visit the Health Access WeBlog for our previous analysis of the Maryland decision here.)

Assemblyman Bob Huff, R-Diamond Bar, warned that relying on the tobacco tax to finance health reform was unwise, given that the numbers of smokers has steadily declined over the years, and a severe jump in tobacco taxes would drive more to quit – reducing the amount of revenues the state would draw from such a tax. To that, Nunez jokingly asked whether Huff would agree to support an even higher tax – at $3 to $4 per pack. Seriously, Nunez said he and staff were aware of the fact that tobacco taxes were a declining revenue source, but expected the hospital fee to increase ovcer time and offset the losses from tobacco, along with the kicking in of other reforms.

Assemblywoman Audra Strickland, R-Thousand Oaks, was unconvinced and asked whether the speaker had considered what would happen if health costs continued to exceed revenues. Nunez’ staff responded that MIT economist Jonathan Gruber – who had modeled the numbers for both the administration’s and legislative proposals – had taken the most conservative route in estimating costs. Gruber had “overestimated costs’’ by assuming that none of the cost containment provisions saved any money and “100% of the costs show up the first day’’ something that never happens in a program of this scale that requires years to operate at full capacity.

In light of yesterday’s Legislative Analyst’s Office’s fiscal forecast predicting a $10 billion budget shortfall over the next two fiscal years, Republicans also said this was not the time to be embarking on an ambitious quest to provide health care for all, even though Gov. Schwarzenegger said last week that health reform would actually help rein in costs by assuring the state spent health care money wisely and efficiently.

Assemblyman Hector De La Torre, D-South Gate, pointed out that because ABX1 1, if passed, would not be fully implemented until July 2010, the state had time to address budget issues and its deficit before the full reform was implemented.Democrats on the committee, while supporting the bill and health reform, also advocated for specific amendments.

De La Torre, said he was concerned that the bill did not specifically spell out what kind of benefit package consumers would be buying, even though they’d be required to receive coverage. The problem is that “affordable’’ health plans, are also those that cover few benefits and leave consumers on the hook for more health care costs – rather than less. “We need to try to do something to clarify the quality of the health insurance options – that it isn’t OK to offer a $10,000 deductible and have the policy be acceptable and have that work for the employee,” he said.

Assemblyman Dave Jones, D-Sacramento, author of AB1554 that would have required state approval for every health premium increase said he felt strongly that insurance companies needed to justify their need for premium increases.

Assemblywoman Patty Berg pointed out the irony of discussing health reform while the state has approved emergency regulations to disenroll eligible children from Healthy Families and put other eligible children on waitlists until money from the federal government State Children’s Health Insurance Program is hashed out and becomes available and reliable. (Read more about SCHIP here).

Assemblyman Ed Hernandez, an optometrist, said he worried about the availability of providers to care for newly insured. Assemblywoman Karen Bass said she hoped the state would also track health disparities among ethnic groups.

OTHERS WEIGH IN

Feelings about ABX1 1 were also diverse among advocates and interest groups. Positions on the measure fell under five categories: Support, Support if Amended, Concerned, Oppose Unless Amended, and Oppose.

SUPPORT: Organizations that supported the measure generally supporter the notion that the package sought provide universal coverage. This included the California Association for Nurse Practiioners, American Nurses Association and the consumer group CALPIRG.

SUPPORT IF AMENDED: Organizations in this category also felt that ABX1 1 possessed many features that made it appealing – including insurance market reforms, broad public program expansions and a leap toward universal coverage. But advocacy groups in this category were waiting to see the complementary ballot measure language as well, and wanted some issues remained unresolved – such as affordability and a defined minimum benefit package. Organizations that weighed in as “Support if Amended” included: Health Access California, California Medical Association, California Labor Federation, AFSCME, Consumers Union, Small Business Majority, California Association of Public Hospitals, California Hospital Association, AARP, Congress of California Seniors, Service Employees International Union, Children Now/100% Campaign, Children’s Specialty Care Association, Children’s Hospital Association, California Chronic Care Coalition, ACORN, Unitarian Universalist Legislative Ministry, Latino Coalition for a Healthy California, Alzheimer's Association, Latino Issues Forum, California Federation of Teachers, and the California Primary Care Association.

CONCERNED: Organizations in this group said they were not prepared to take an official position on the bill, yet, but said lawmakers needed to be mindful of the populations they represented and specific concerns they sought to raise. This included Western Center on Law and Poverty, an organization representing Christian Scientists, Los Angeles County, the California Immigrant Policy Center, Blue Shield of California, California Pan Ethnic Health Network, Greenlining Institute, LA Health Action, the Academy of Family Physicians, and the American Cancer Society.

This group also included Jennifer Kent of the Department of Health , representing the Schwarzenegger Administration, acknowledging the progress that the Democratic legislative leadership had come in dealing with the Governor's issues, such as with guaranteed issue and Medi-Cal rate increases. She also reiterated where the Governor had adjusted his proposal (most notably last week in agreeing that the employer fee should go as high as 5.5% of payroll, and that subsidies should go to people up to 400% of the federal poverty level.) While her tone was positive, she did express concerns about where differences remained, including with the exemptions to the individual mandate in AB x1 1.

OPPOSE UNLESS AMENDED: Some business and industry groups fell into this category, including groups that stated their desire for health reform but had significant issues remaining. This included the Safeway-led Coalition to Advance Healthcare Reform, Small Business California, Kaiser Permanente, who did not want any individuals to be exempted from an individual mandate, if insurers were going to be asked to provide coverage to everyone, and Protection and Advocacy Inc., representing Californians with disabilities.

OPPOSE: Most organizations and industries in this camp opposed the previous reform proposal by the legislative leadership, although for different reasons from each other. They included: the California Restaurant Association, California Nurses Association, Association of Life and Health Plans, Foundation for Taxpayer and Consumer Rights, Blue Cross of California, National Federation of Independent Businesses, Chamber of Commerce, California School Employees Association, Howard Jarvis Taxpayers Association, California Association of Health Plans, California Manufacturers Association, Gray Panthers, Butte County Health Care Coalition, and California Small Business Association.

(Of interest, Blue Cross said that nearly 600,000 policyholders would hold plans that might disqualified under ABX1 1 – implying that two-thirds of its individual insurance policy holder are underinsured.)

WHAT’S NEXT: The Assembly is expected to return November 26, at which time AB x1 1 will be amended, and considered in both Appropriations Committee. In that week after Thanksgiving, the Assembly is expected to vote on the measure, and assuming approval, pass it through to the Senate. Speaker Nunez seemed committed to placing a version of AB x1 1 on the Governor's desk in the next few weeeks.

If the Governor were to sign a version of AB x1 1, the expected plan would be to have most or all of the proposal be enacted only if and when a ballot measure would be passed with the financing elements of the proposal. If an agreement if reached, the Governor and legislative leaders, along with a coalition of supporting stakeholders, are expected to campaign for such a ballot measure to be slated for November 2008.

For more information, contact the author of this report, Hanh Kim Quach, policy coordinator, Health Access California, at hquach@health-access.org.

To view other resources from the Year of Health Reform, visit our website, at:
http://www.health-access.org/advocating/2007_healthdebate.html.

Labels: Legislation, Nunez, Updates, YearOfReform

posted by Anthony Wright | Permalink | 2:25 AM


 

The comparisons...

Wednesday, November 07, 2007

HEALTH ACCESS UPDATE
Wednesday, November 6, 2007


DEMOCRATIC LEGISLATIVE LEADERS INTRODUCE NEW HEALTH PROPOSAL
* AB x1 1 Would Significantly Expand Public Programs; Subsidies for Coverage
* Would Require Californian to Have Health Insurance, But Conditioned on Affordability
* Answers Critique by Governor in Veto of AB8, the Legislative Leaders’ Previous Proposal
* Hearing Scheduled for November 14th

New on the Health Access Weblog: More Analysis/Commentary of Nunez's New Proposal on Health Reform; Breaking News on the Special Session, including new Assembly Health Committee: More on SCHIP and the Fallout from the Bush Veto;


Democratic legislative leaders on Tuesday announced out their latest health reform proposal, as the framework for a potential agreement with Governor Schwarzenegger. The press release is available at the website of Speaker Fabian Nunez.

The framework would provide more help to more Californians in getting affordable coverage than either the Governor's plan or the legislative leaders' previous proposal, AB8. It also moves in the direction of the Governor's proposal in key areas, including spreading the financial burden among a broader range of contributors, and introducing a requirement that all Californians buy health coverage--although only if coverage is deemed affordable.

The new bill, AB X1 1 (the first bill in the first extraordinary session of the legislature) will be formally introduced as legislative language later this week. It is expected to be heard in the Assembly Health Committee hearing on November 14th. Financing elements of the plan, which include a hospital fee, employer fee and a $2-a-pack tobacco tax, would appear before voters in November 2008.

THE HISTORY: The latest proposal, by Assembly Speaker Fabian Nunez and Senate Pro Tempore Don Perata, is the latest legislative volley in the health reform debate, which began nearly a year ago when both leaders introduced separate plans. That was followed by the governor’s January release of a 10-page concept paper. The leaders then merged their plans into one bill, AB8, sent that to the governor, who vetoed it in October. That same week, the Governor finally released the legislative language of his proposal, which largely mirrored his January proposal. This new proposal is the legislative leaders' attempt to deal with all the issues raised by the Governor in his veto of AB8.

THE PRESS CONFERENCE: Assembly Speaker Fabian Nunez hailed his proposal as a "breakthrough," and mentioned that "the tumblers are falling into place," and when the Governor moves, California "will finally unlock" the puzzle of health care reform. Senate President Pro Tem Don Perata acknowledged that "we've been doing this a long time," and "if it was simple, it would be done: it's not simply, and it's not done." But again, he emphasized that this would be the framework of a deal with the Governor, if the Governor met them with the significant steps that they took.

SUBSTANCE: WHAT’S IN THE BILL: Many of the concepts in the latest proposal closely follow what lawmakers have been discussing all year, with some adjustments:

PUBLIC PROGRAM EXPANSION:

* AB X1 1: 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.
* CHANGE FROM AB8: The proposal goes beyond AB8 with expansion of Medi-Cal to adults without children at home, funded by the new revenues raised. Another new element is the advanceable, refundable tax credits to ensure affordability for families up to 450% of the federal poverty level, or $92,925 for a family of four.
* DIFFERENCES WITH GOV’S OCT. PROPOSAL: The Governor's plan expands public program coverage for parents up to 250 percent of poverty ($51,624), rather than 300 percent ($61,625) under AB X1 1. The Governor's plan has subsidies through tax credits between 250 to 350% of poverty to buy coverage, rather than up to 450% in AB x1 1. That tax credit would make the cost of the premium 5 percent of the family’s income, but that credit would not take into account out-of-pocket costs.
* COMMENT: The proposal would be the largest public coverage expansion since the creation of Medicare and Medicaid 40 years ago. Millions of Californians would have access to get comprehensive coverage through Medi-Cal or Healthy Families.

MINIMUM EMPLOYER CONTRIBUTION

* AB X1 1: 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.
* CHANGE FROM AB8: The previous proposal required all employers – regardless of size and payroll – to pay 7.5 percent for health benefits.
* DIFFERENCES WITH GOV’S OCT. PROPOSAL: The governor’s proposal requires an employer contribution of 4 percent of payroll if a business has more than 10 employees. Businesses with fewer than 10 workers would pay between 0 percent and 4 percent. Even if a business pays into the purchasing pool, their workers would not qualify to receive coverage from the pool if the worker doesn't meet the standard income requirements for public program coverage or subsidies.
* COMMENT: The employer contribution is lessened to deal with the concern raise by Governor Schwarzenegger in his veto message, but it still provides employers a new, affordable option by which to cover their employees. Having a group purchasing pool, and a sliding scale contribution level allows businesses to actually provide a benefit that might otherwise be out-of-reach. Additionally, ensuring that businesses pay on both their lower-wage (less-than $25,000 earners) and higher earners assures that everyone benefits, not just the high-earning or longest-serving workers.

INDIVIDUAL RESPONSIBILITY:

* AB X1 1: 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.
* CHANGE FROM AB8: Required only workers to accept coverage offered to them on the job if the premium and out-of-pocket costs were less than 5 percent of wages.
* DIFFERENCES WITH GOV’S OCT. PROPOSAL: Every Californian would be required to have coverage, without exception, limit, or condition. No considerations for affordability or hardship.
* COMMENT: Consumer advocates have been wary of an individual mandate that would force Californians to buy coverage that was unaffordable, or that they had been denied, or was too complicated to use and keep. AB X1 1, however, addresses many of those concerns by ensuring that Californians would be exempted from the mandate if it is deemed unaffordable. Most Californians, after all, want health coverage; but often, it is unavailable or unaffordable. Additionally, AB X1 1 would establish new rules for insurers, restricting their ability to deny enrollees for so-called “pre-existing’’ conditions. More details are being sought about the minimum coverage level (although requiring high out-of-pocket cost plans will be prevented by the affordability protection).

PROVIDER RATES

* AB X1 1: Would raise Medi-Cal rates, as part of the package with the hospital assessment and the drawing down of federal matching funds for California.
* CHANGE FROM AB8: AB8 didn't include the Medi-Cal rate increase and hospital assessment, due to inability to get the needed 2/3 vote.
* DIFFERENCES WITH THE GOV'S OCT PROPOSAL: Essentially the same proposal.
* COMMENT: California has some of the worst Medicaid reimbursement rates in the country. This will allow those on Medi-Cal to have better access to providers, and better fund the health system we all rely on, by drawing down California's fair share of federal matching funds.

FINANCING

* AB X1 1: 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.
* CHANGE FROM AB8: The previous legislation was constrained to revenues only achievable in a majority vote bill, and did not include the hospital or tobacco taxes.
* DIFFERENCES WITH GOV’S OCT. PROPOSAL: Governor’s proposal has a lower employer contribution of four percent, but higher – and possibly unlimited – contribution from workers and individuals. Instead of a tobacco tax, Schwarzenegger’s proposal derives additional revenues from leasing the state’s lottery.
* COMMENT: Most of the financing elements would be put before voters in November 2008.

COST CONTAINMENT

* AB X1 1: 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.
* CHANGE FROM AB8: The proposal adds language from the Governor's proposal around health information technology, e-prescribing; obesity; smoking cessation; and community makeover grants.
* DIFFERENCES WITH GOV’S OCT. PROPOSAL: Include cost containment elements that were included in AB8. On transparency, Schwarzenegger’s proposal only sets up an advisory committee to set up disclosure procedure, but no long term follow through. The Governor's proposal does not include prescription drug bulk purchasing, nor a public insurer option.
* COMMENT: Cost containment remains a central focus for health advocates. Without addressing the underlying cost of health care, health inflation will continue to outpace wages and cost of living increases, rendering any reforms moot within a few years.

AFFORDABILITY

* AB X1 1: 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.
* CHANGE FROM AB8: AB8 restricted premiums and deductibles to 5 percent of income. All businesses had to pay the same amount under AB8.
* DIFFERENCES WITH GOV’S OCT. PROPOSAL: The new proposal extends subsidies and support to a greater swath of Californians, making health care more affordable.
* COMMENT: Affordability has been the key issue for health advocates – particularly if there is any requirement to take up or buy coverage. Californians should not be penalized for not purchasing coverage they can’t afford, can’t get and provides little or no value or coverage. Exempting Californians for affordability gives consumers the necessary escape valve against unaffordable coverage. Expanding public programs is a huge boon to many middle-income Californians. And a group purchasing pool could help negotiate lower rates for all eligible workers.

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.

Even with all these benefits, consumer advocates will be vigilant when looking at the full legislative language if any population gets more of a burden than a benefit. The notion of an individual mandate has been controversial, but many of those concerns would be addressed with the concepts described, including strong affordability protections and exemptions; significant subsidies with the ability to get coverage through a statewide purchasing pool, and if this was done in the context of expanded group coverage and a smaller individual market. Issues that will be reviewed by consumer advocates will include the definition of minimum benefits; how out-of-pocket costs are factored in either the minimum standards or the affordability protections; the nature of the affordability test; and the structure of the statewide purchasing pool.

PROCESS: AB X1 1 is expected to be formally introduced o