California Faces Difficulties In Establishing Universal Coverage

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Thedefeat of a $14.9 billion proposal tooverhaul California's health care system "underscores adifficulty states face in achieving universal insurance coverage"and "their inability to slow the upward trajectory of healthcare costs," the Wall StreetJournal reports. Marian Mulkey, seniorprogram officer at the CaliforniaHealthCare Foundation, said,"The conversation in California was more about trying to findways to pay for coverage rather than to fundamentally change thehealth care system and get at its big cost drivers."

Mulkeysaid California put itself in "that fast lane of health carespending" increases by focusing on expanding coverage withoutincluding mechanisms to reduce costs. She added that states do nothave the "policy levers in their arsenal to do that kind offundamental reform, when you consider how much of health care isdriven by federal financing."

Paul Ginsburg, presidentof the not-for-profit Centerfor Studying Health System Change,said, "With the economy souring, it became clear that this wasway beyond California's fiscal capacity to pull off." He added,"Some of the potential policies to address costs aren't reallyavailable to states." For example, only the federal governmentcan make changes to taxes assessed on health insurance or to the wayphysicians are paid. The federal government also is "betterpositioned to evaluate new technologies and drugs to determinewhether they add enough value to justify higher costs," theJournalreports.

Although the defeat is a "setback for stateinitiatives," it is not necessarily indicative of how otherstates' proposals would fair "because California's enormousuninsured population's shaky fiscal health made it a poor prospectfor change," according to the Journal.Len Nichols, a health economist at the NewAmerica Foundation who hasadvised Gov. Arnold Schwarzenegger (R), said achieving universalcoverage in California might be tougher than anywhere else, despitethe strong support from labor groups for a single-payer,government-run health care system (Rundle, WallStreet Journal, 1/30).


Thechallenge California faced in passing a universal health coverageproposal "illustrates the difficulty of sweeping reform and putsrenewed focus on the presidential race," the SanFrancisco Chroniclereports. Patrick Murphy, a professor of politics at the Universityof San Francisco anddirector of the McCarthyCenter for Public Service and the Common Good,said, "What happened in California will certainly become part ofthe discussion and could push candidates to be more specific,"adding, "No matter who wins, the California experience is verymuch an example of what a future president could face in trying toreform health care."


According to the Chronicle,all the candidates are calling for improvements health careaffordability and availability, but the "various proposalsreflect a philosophical gulf between Democrats and Republicans."Larry Levitt, a vice president of the KaiserFamily Foundation, said,"The Democratic proposals are building on the employer-basedsystem while Republicans want to shift to individuals purchasingtheir own coverage and be given tax incentives," adding, "TheDemocrats want to deliver more comprehensive benefits, while there ismuch more of an emphasis on health savings accounts by Republicans."

However, according to Anthony Wright, head of the Californianot-for-profit HealthAccess, the question forDemocrats is whether they can achieve significant change "whenour nation has had a history of failed attempts" (Fernandez, SanFrancisco Chronicle, 1/30).

FutureCalifornia Plans

Schwarzeneggerand state Assembly Speaker Fabian Nunez (D) on Tuesday said theywould continue working on a plan to overhaul California's health caresystem, the SacramentoBee reports.Schwarzenegger said that "just because the Senate has missedthis golden opportunity to pass our health care reform doesn't meanthat we should walk away from reforming our broken health caresystem" (Furillo, Sacramento Bee,1/30).

In a news conference with Nunez, Schwarzenegger saidhe would "regroup" with various stakeholders to devise asuccessful health care plan and to "find out exactly" whythe bill failed. He suggested that there was something "underneath"the reasons given by opponents of the plan who argued it would impactstate spending over time.

However, Alicia Trost, spokespersonfor Senate President Pro Tempore Don Perata, said the Senate's onlymotivation for rejecting the bill was the $14.5 billion budgetdeficit (Sacramento Bee,1/30). Perata said that if Schwarzenegger "wants to spend hisenergy working with leaders around here, he ought to spend it on thebudget," adding that the governor's proposed spending plan toreduce the deficit would include cuts to health care services forlow-income residents (Yi, SanFrancisco Chronicle,1/30).


TheCalifornia health care overhaul bill "died at the hands ofDemocrats," which should be a reminder to Clinton and Democraticpresidential candidate Barack Obama (Ill.)that if they "want to push a major health care reform throughCongress, they will have to find a way to appease their own left wingwhile not alienating business and taxpayers," a Journaleditorial states. "What the California collapse should discreditin particular is the individual mandate as a policy tool forRepublican reformers," the Journalcontinues, adding that "in order to be enforceable, such amandate inevitably becomes a government mandate, and a very expensiveone at that."

The editorial concludes, "Schwarzenegger'sspectacular failure shows that there's an opening for Republicans tomake the case for health care reform based on choice and tax-equity,not mandates and tax hikes" (WallStreet Journal, 1/30).

Reprinted withpermission from can view the entire KaiserDaily Health Policy Report,search the archives, and sign up for email delivery The Kaiser Daily Health Policy Report is published, a free service of The Henry J. Kaiser FamilyFoundation.