Feb. 11: Sacramento, Calif. - A play-or-pay health reform measure in California proved to be the wrong bill in the wrong place at the wrong time, observers say. The California reform bill, which died last week in the state Senate’s 11-member Health Committee, failed largely because of the state’s huge budget deficit and concerns about the cost of the state subsidizing health insurance premiums for millions of low-income uninsured state residents, health experts note.
In addition, some say that broadly expanding coverage is especially difficult in states that, like California, have a large uninsured population, and that ways to better control the costs of such programs have to be addressed at the federal level.
The measure-A.B. 1X1-which was crafted by Republican Gov. Arnold Schwarzenegger and Assembly Speaker Fabian Nunez, D-Los Angeles, would have required employers either to provide health care coverage to their workers or pay a tax to the state, which would have provided coverage on their behalf.
The bill, which passed the Assembly in December, also included a requirement that all state residents obtain health insurance.
Last week’s panel vote also nixes a companion November ballot initiative that would have provided funding provisions, including the employer spending requirements, an increase in the cigarette tax and fees paid by hospitals to support increases in provider reimbursement from the state’s Medicaid program.
The demise of California’s reform measure was largely blamed on the state’s economic troubles. “If the bill had gotten to the Senate six or eight months ago, it might have passed,’ said Mike Langan, a principal at Towers Perrin in Valhalla, N.Y., who has been following California’s reform efforts.
However, because the bill did not go to the Health Committee until January-after lawmakers discovered the state was facing a $14 billion budget deficit-“the soft economy caught up with the realities of the bill,’ he said.
“Financing was everything, as it is with most big policy questions, and I think from the remarks that he made publicly and also from a common-sense perspective, it appears that Sen. (Don) Perata and others were concerned about the perceived disconnect between the idea of a new $14 billion health program juxtaposed against the state’s $14 billion deficit,’ said Marian Mulkey, senior program officer for the California Healthcare Foundation, an Oakland-based nonprofit organization.
“The notion of selling that publicly through a ballot initiative felt like an uphill battle at best. I do think the financial circumstances of the state made it an even more difficult prospect,’ she added.
Aside from its high price tag, another aspect of the legislation that made it untenable was its failure to address rising health care costs, according to Peter Lee, former president of the Pacific Business Group on Health, who recently assumed a new role as executive director of national health policy for the organization made up of about 50 large health care purchasers.
“The reform in California collapsed under a budget deficit and the absence of a credible path for cost control,’ he said. The defeat of the measure also underscores the fact “that many of the levers to really address cost trends are not ones that states can affect,’ Mr. Lee added.
For example, “you can’t change the physician payments to encourage and reward better doctors, because the payment system is largely driven by Medicare,’ Mr. Lee said. In addition, any research to assess what treatments are the best and most cost-effective “has to be national,’ he said.
The failure of the California reform measure “does tend to shift the focus to the federal government,’ because “many of the things that the government can do to address costs can only be done at the federal level, such as investigations into cost-effective treatment options, changing the provider payment system and tax treatment of health insurance,’ said Paul Ginsberg, president of the Washington-based Center for Studying Health System Change.
He added that the failure of California’s reform efforts is likely to dissuade other states with similar ambitions from enacting similar proposals.
“In fact, I think other states have been having pause, which is why none of the others have gotten to the finish line’ except Massachusetts, Mr. Ginsberg said.
“There may be states like Massachusetts where a significantly low part of population is uninsured, where it was easier to rearrange existing health care spending to expand coverage to more people,’ said Mr. Langan. “But even if they pass such legislation, there’s still the looming question about pre-emption’ by the Employee Retirement Income Security Act, which precludes states and cities from dictating the content of employee benefit plans.
Source: http://www.businessinsurance.com/cgi-bin/article.pl?articleId=23975
