California Health Care Agreement Could Spur Health Care Overhaul Debate

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The "adoption of a comprehensive plan to overhaul health care in abig, politically influential state" such as California "probably wouldspur similar efforts around the country and increase pressure onpresidential candidates to tackle the issue," the Washington Postreports. California Gov. Arnold Schwarzenegger (R) "still has nothingto show for the grand" health care proposal he announced in January,but the focus "is turning back to health care" after lawmakers lastweek reached an agreement on a state budget, according to the Post. The Postreports that successful efforts to pass health care legislation inCalifornia also could influence Congress next month as it resumes thedebate over expanding SCHIP (Lee, Washington Post, 8/26).

Bothchambers of the California Legislature in June approved Democraticplans to overhaul the state health care system and provide coverage formore uninsured residents. The bill (AB 8)would require employers to contribute 7.5% of their payrolls toworkers' health coverage but would not require all state residents toobtain health insurance -- a key component of Schwarzenegger's healthcare proposal.

Schwarzenegger's plan for reform would levy a4% fee on businesses that do not provide health benefits to workers.His plan would raise additional funds through a 4% fee on hospitals'gross revenues and a 2% fee on doctors, would and increase providerrates paid by Medi-Cal, the state's Medicaid program (Kaiser Daily Health Policy Report, 6/25). Schwarzenegger last week threatened to veto the Democrats' legislation.


Drew Altman, president and CEO of the Kaiser Family Foundation,said, "If a breakthrough could occur in California, it would really bean earthquake in terms of health reform," adding, "A lot turns onwhether it succeeds or fails." Altman continued, "Candidates will lookat that when they decide how hard to push this. The Congress in 2009will look at it. It will affect the whole psychology of the healthreform movement that's building." However, analysts say reaching anagreement on health care will be difficult.


The Postnotes that in Massachusetts, which implemented its health insurance lawin July, "business groups, consumer advocates and politicians workedtogether to craft the new law, a sharp contrast to the fractiousatmosphere in California." In addition, it is uncertain whether theBush administration would allow the state to expand its version ofSCHIP.

Marian Mulkey, senior program officer with the California HealthCare Foundation,said about efforts to pass reform legislation in California, "What'sgoing to happen next? I really think it's anybody's guess," adding,"The next few weeks will be critical" (Washington Post, 8/26).


California lawmakers on Friday completed a state budget, and now the"biggest agenda item" for California lawmakers and Schwarzenegger ispassing health care reform legislation, "an issue that politicalleaders from both parties have called one of their top priorities thisyear," the San Francisco Chronicle reports. The $145 billion budget was 56 days overdue.

Schwarzenegger used line-item vetoes to cut $703 million from the budget before signing it on Friday, according to the Chronicle.The cuts included $527 million from health and human services programs,including $330 million from Medi-Cal and $55 million from a programthat provides services to homeless adults with mental illnesses. Thegovernor also cut $9.8 million from an outreach program to enrollchildren in state health insurance programs and $6.3 million from thestate's prescription drug benefit that allows certain families topurchase discounted drugs.

The budget preserves $38 billion inhealth and human services spending. Cuts to the budget increase thestate's surplus to $4.1 billion, according to the Chronicle (Yi, San Francisco Chronicle, 8/25).

Reprinted with permission from Youcan view the entire Kaiser DailyHealth Policy Report, search the archives, and sign up for email deliveryat The Kaiser Daily Health Policy Report is published for, afree service of The Henry J. Kaiser Family Foundation.