Tuesday, December 18, 2007

California Health Care

The California legislature is slowly moving towards required health insurance for all residents. The Assembly passed the bill (strictly along partisan lines) and the Senate is taking it up. The law would be phased in over two years, but only if voters pass the proposition that will be placed on the November ballot which sets forth the financing (California law requires a two-thirds majority in the legislature to raise taxes or impose new taxes, which means that part can't possibly pass with the current composition of the legislature).

Daniel Weintraub provided a quick sketch of the major components of the plan which represents a compromise between the Assembly and the governor in today's Sacramento Bee"

The bill would require nearly everyone in California to have insurance, provided by either the government or their employer or purchased independently.

The measure would require employers to cover their workers or else pay a fee to the state to help subsidize coverage for those who don't get it through the workplace.

The new law would require insurance companies to sell coverage to all who apply, regardless of their health condition, with rates varying based only on age and geography. Insurers would have to spend at least 85 percent of their revenues on health care, with no more than 15 percent going for administrative costs, marketing and profits.

Smokers would pay an additional tax of $1.50 for each pack of cigarettes.

Pharmaceutical companies would probably see their profits cut because the bill allows the state to buy prescription drugs in bulk for the general public, with the goal of using the market clout of millions of customers to drive prices down.

Is the plan perfect? Hardly. It's likely that the requirement that employers provide health insurance or pay a fee to the state won't make it through the courts. Funding by the tobacco sin tax is a very dicey proposition. Let's face it, smokers are a dying breed (sick humor intended).

Many special interest groups are already baring their teeth, some to protect their profits, others to protest the involvement of insurance companies rather than the state in administration. PHARMA, the tobacco industry, and at least one major insurer will pour millions into the campaign to defeat the ballot proposition. The California Nurses Association wants to cut out insurance companies entirely.

Still, the measure is an indication that the state is trying to make universal access to health care a reality. Here's how Weintraub describes it:

The health care bill crafted by Gov. Arnold Schwarzenegger and Assembly Speaker Fabian Núñez represents a complex mix of mandates, incentives, taxes and subsidies, all built around two simple ideas: Everyone in California should have insurance, and no one should be denied coverage because of a pre-existing health condition.

Until the federal government gets its act together on the issue, this appears to be the most we can hope for in California.

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