Schwarzenegger, Nunez Submit Ballot Initiative For Health Care Reform Proposal

California Gov. Arnold Schwarzenegger (R) and state AssemblySpeaker Fabian Nunez (D) on Friday submitted to the state attorneygeneral a proposed ballot initiative for the November 2008 electionsthat would provide the funding mechanism and other changes necessaryto enact their plan to overhaul the state's health care system, theLos Angeles Timesreports. The submission "sets the stage for what is expected tobe a costly and contentious battle pitting the two state leaders andtheir allies against some powerful opponents," according to theTimes (Rothfeld, Los Angeles Times,12/29/07).

The proposal, approved by the California Assemblylast month, would require most state residents to obtain healthcoverage. Under the bill, residents with incomes up to 250% of thefederal poverty level would receive state subsidies for coverage, andresidents with incomes up to 400% of the poverty level would receivetax credits to ensure that health care premium costs do not exceed5.5% of their incomes. Insurers would be prohibited from denyingcoverage to residents because of pre-existing medical conditions(Kaiser Daily Health Policy Report, 12/21/07).

The ballotinitiative submitted by Schwarzenegger and Nunez would ask voters toapprove about $9 billion in fees and taxes to partially fund the $14billion plan. The remaining funding would come from the federalgovernment, consumer premiums and copayments (Chorneau, SanFrancisco Chronicle, 12/29/07). The initiative wouldnearly double the state tax on cigarettes to $1.75 per pack, from 87cents per pack, in mid-2009. The initiative also includes an employerrequirement that ranges from 1% to 6.5% of their payrolls, dependingon the level of payroll. Funds raised by this fee would go into a newCalifornia Health Care Trust Fund to assist state residents who findinsurance unaffordable. The initiative specifies that funds directedto the health care trust fund only could be used for the specifiedpurpose.

In addition, the initiative would:

• Specify the process by which programs would be suspended if\tthe state encounters insufficient funding;

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• Levy new fees on hospitals; and

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• Approve a $25 million loan from the state's general fund to\tprovide funding to families with children who will be dropped from\tcity or county health care programs during the transition to the\tstate program (Los Angeles Times, 12/29/07).

Process

Submitting the measure to the attorney general "is the firststep" in qualifying it for the ballot, according to theChronicle. The attorney general has seven weeks toreview the initiative, assign it a formal title and write a summarythat can be distributed to voters. Schwarzenegger and Nunez likelywill need signatures from more than one million registered voters.

In addition to approval of the ballot measure, supporters ofthe health care proposal need to pass legislation (AB1X) that wouldmake changes to the state and local government to allow the newhealth care system to operate. State Senate Pro Tempore Don Perata(D) has delayed a vote on the bill until mid-January, after afinancial analysis is completed. If the bill is amended in a"substantial way, a new initiative would have to be drafted andthe attorney general would have to begin his review again -- costingbackers of the plan precious time," according to the Chronicle.The Chronicle reports that for supporters of the reformproposal, "time is running short to qualify the measure for theballot and then effectively campaign for its passage" (SanFrancisco Chronicle, 12/29/07).

Problems With ERISA

The Christian ScienceMonitor on Monday examined how California leaders "arepushing forward with a health care reform effort ... despite anominous legal ruling last week" that found that a San Franciscohealth care program violated the 1974 Employee Retirement IncomeSecurity Act by requiring employers to spend a specified amount ofmoney on health programs for their employees. ERISA prevents stateand local governments from meddling with employer-provided benefits.The ruling "reiterates the almost Sisyphean nature of healthcare reform at anything but the national level," and thesubmission of the ballot initiative by Schwarzenegger and Nunez"signal[s] they are still willing to try to push the boulderback up the hill," the Monitor reports (Arnoldy,Christian Science Monitor, 12/31/07).

Reprinted with permission fromkaisernetwork.org.You can view the entire KaiserDaily Health Policy Report, search the archives, andsign up for email delivery at kaisernetwork.org/email. The Kaiser Daily Health Policy Report ispublished for kaisernetwork.org, a free service of The Henry J.Kaiser Family Foundation.