The Play: Mega Health Care Bill for California Lined Up as Leaders of State Senate and Assembly Combine Provisions into AB 8

Senate Committee to Hear Bill July 7

By Frank D. Russo

Assembly Speaker Fabian Nunez and Senate President pro Tem Don Perata announced at a press conference today that they have ironed out their differences and combined parts of their separate health care reform bills into a single piece of legislation. The Speaker’s AB 8 will now be the vehicle for a combination of some of Perata’s SB 48 and parts that had been in it previously. A preliminary description of the new bill and which body parts came from which bill or were rewritten altogether is at the end of this article.

The measure is described as extending health insurance to millions of Californians who have none and institute reforms to expand coverage and rein in spiraling medical costs. It features shared responsibility among employers, individuals, reinvested state dollars, and new federal funds.

This merging of separate bills by Perata and Nunez into one measure represents the latest step in the Legislature’s years of efforts to develop a comprehensive and hopefully bipartisan plan to fix California’s broken health care system. It follows a pledge made by both Perata and Nunez exactly two weeks ago to work out the difference between their bills, both of which had passed their house of origin.

Last year, the legislature has SB 840 by Senator Sheila Kuehl on a straight party line vote of Democratic votes only to see the measure vetoed by Governor Schwarzenegger. SB 840, by all indications is likely to pass again and be presented to the Governor, but he has given no indications that he would consider signing it in anything resembling the central concept of the bill, a single payer system it’s supporters call “Medicare for All.”

It is unclear whether a single Republican legislator will support the new AB 8.Two weeks ago Perata said, “We’ve been unable to debate the Governor,” noting that he has no bill as no Republican in the legislature would carry it. He and Nunez are focused on getting a bill passed and signed into law. Perata has said: “We’re well aware that we can do anything we want up here. If we don’t get a signature, it’s dry fire.” He also said there’s not a single Republican who will vote for the Governor’s plan. At that time, he did not prejudge the possibility of negotiations to try to bring some Republicans legislators along.

The reaction from consumer and health care advocates was positive. Anthony Wright, executive director for Health Access California, the statewide health care consumer advocacy coalition representing over 200 groups said: “The merged proposal moves us toward needed health reforms that will expand coverage to many of the uninsured and provide more security to the insured. This reform provides a new, affordable option for employers to cover their workers, who would have new guarantees about the affordability of their premium. In addition to these important steps, more can and should be done to ensure affordable deductibles and out-of-pocket costs for consumers, and to contain costs and oversee rates for businesses and individuals.”

The Governor also wants to see a landmark bill that he can sign into law as he has declared this to be “the year of health care reform.” In order that there be what many consider worthy of the name “reform,” however, many believe in single payer, while others, including progressive legislators such as Berkeley’s Assemblymember Loni Hancock have voted for AB 8 in addition to AB 840. At the time she voted for AB 8 on the Assembly floor, Hancock stated “I believe this bill represents the best chance we have to do something about the millions of people who don’t have health insurance in this state.”

The Governor has labeled SB 840, the single payer approach as “government run health care,” something that Senator Kuehl has bristled at and challenged, noting that just as in the case of Medicare patients will be able to choose their own doctor and that the present system would continue with doctors as a private business, minus the insurance carriers who skim off 25 to 30% of every premium dollar for overhead and profit.

The Governor himself was pushing for a health care bill this morning, meeting with business owners and employees who are concerned about “job lock”– which happens when people stay in jobs out of fear of losing health care coverage. You can listen to what the Governor had to say by clicking here for a 19 minute audio clip.

This was not lost on Anthony Wright of Health Access California who noted:

At 10:00am, Governor Schwarzenegger has a press conference about “job-lock,” with people who make career and life decisions in order to get health coverage. It’s a big issue: we constantly hear of people who give up their dreams of entrepreneurship for the corporate or government job that will provide health coverage; or the people who unhappily stay in jobs (or marriages) for the health coverage. All this makes the economy less efficient. The solutions? Beyond having a universal system as in SB840(Kuehl), we could at least ensure that all employers are contributing toward their worker’s coverage, that our public programs are less restrictive and cover those who need assistance, and that insurers can’t deny coverage because of one’s health status.

You can watch the Nunez-Perata press conference with the following links:

Speaker Nunez and Senator Perata introduce the newly-merged bill.
http://www.youtube.com/watch?v=LjPfbrX9nQg

Speaker Nunez and Senator Perata field press questions (in three parts).
http://www.youtube.com/watch?v=Dowi77g7pJU
http://www.youtube.com/watch?v=_-mcCgpjAQg
http://www.youtube.com/watch?v=ziAzWmBIpbI

Speaker Nunez provides a Spanish-language explanation of the bill.
http://www.youtube.com/watch?v=LisT7D1Uf8c

What also remains to be seen is if some or all of the provisions of AB 1554 by Assemblymember Jones that would at least enact some of the protections from gouging and is modeled on Proposition 103 which has saved consumers hundreds of millions of dollars, can be incorporated into or tied to any measure sent to the Governor by the leadership of both houses.

“At every step in this process, we have proved the critics wrong. We are showing that we can tackle a problem as big and complex as health care – and improve the lives of millions of Californians,” Perata said. “I look forward to finishing what we have started and delivering to the Governor meaningful health care reform.”

“Our unified stance will no doubt disappoint those who were thinking differences between the Assembly and Senate might delay or derail our chances of enacting health care reform,” Nunez said. “We’ve put together the vehicle to fix health care in California. We just got it tuned up. Now the governor needs to decide if he’s willing to get on board.”

AB 8 by Nunez passed the Assembly on June 7 and is scheduled to receive a hearing in the Senate Health Committee on July 11. Details of how the measure differs from SB 48 by Perata and the previous version of AB 8, received from Perata and Nunez’s offices are set forth below. More analysis will follow. As they say, the devil is in the details. The bill is not yet in print.

MERGING PROVISIONS OF AB 8 (NUÑEZ) AND SB 48 (PERATA)

Summary of Key Compromises

1.GUARANTEED ISSUE & INDIVIDUAL MANDATE

AB 8
• No individual mandate.
• Individual market: Managed Risk Medical Insurance Board (MRMIB) to create a list of high risk conditions, individuals with those conditions go to high risk pool.
• Linked to AB 2 (Dymally) which restructures and fully funds the high risk pool by a broad assessment on all health plans.
• Guaranteed issue of all other products in the individual market

SB 48
• Individual mandate for individuals above 400% of the federal poverty level unless their share of premium exceeds 5% of family income.
• High risk pool or reinsurance model for individuals under 400% of FPL not subject to the individual mandate with serious medical conditions.
• High risk pool/reinsurance funded by a broad assessment on all health plans.
• Guaranteed issue of all products with some phase in based on the effectiveness of the individual mandate.

COMPROMISE: Guaranteed issue for everyone in the individual market without serious medical conditions. High risk pool for individuals with serious medical conditions, funded by a broad assessment on health plans. No individual mandate.

2.AFFORDABILITY
•SB 48 requires MRMIB to ensure that premiums for employees under 300% of FPL in the purchasing pool do not exceed 5% of family income after taking into account tax savings.
•AB 8 does not.
COMPROMISE: Senate Version

3.EFFECTIVE DATE OF PURCHASING POOL AND EMPLOYER FEE
•AB 8: 2009
•SB 48: 2011

COMPROMISE: 2010

4.PREMIUM ASSISTANCE
•AB 8 provides assistance to families and children under 300% of FPL that are offered employer-sponsored insurance by subsidizing their premiums.
•SB 48 does not.

COMPROMISE: Assembly Version

5.MINIMUM EMPLOYER SPENDING REQUIREMENT
•SB 48 gives MRMIB the authority to adjust the employer fee to ensure fiscal solvency.
•AB 8 does not.
COMPROMISE: Senate Version

6.SMALL BUSINESS EXEMPTIONS
•AB 8 contains the following exemptions for small business that:
a.Have less than 2 employees;
b.Have a payroll of $100,000 or less; or
c.Are in business for 3 years or less
•SB 48 contains no exemptions for small business

COMPROMISE: Senate Version

7.MANDATORY SECTION 125 PLANS
•AB 8 requires all employers to establish Section 125 plans for purposes of sheltering employee health insurance premiums from state and federal tax.
•SB 48 requires employers that opt to pay the fee to establish Section 125 plans.

COMPROMISE: Assembly Version

8.INSURANCE MARKET REFORMS

•AB 8 extends small group rules to mid-size employers with 51-250 employees.
•SB 48 extends the small group rules to mid-size employers with 51 – 199 employees.
COMPROMISE: Assembly Version
•SB 48 phases out the rate bands established in the mid-size group market.
•AB 8 does not.
COMPROMISE: Senate Version
•AB 8 requires MRMIB to create a standardized medical underwriting form for the individual market and requires health plans to offer 3 uniform benefit designs across both the individual and group markets.
•SB 48 does not.
COMPROMISE: Assembly Version.

9.COST CONTAINMENT
•SB 48 directs MRMIB to ensure that health plans contracting with the purchasing pool use efficient practices to control costs (preventive care, chronic disease management, standardized billing, health lifestyles, etc.). SB 48 requires MRMIB to negotiate with Medi-Cal managed care plans.
•AB 8 does not.
COMPROMISE: Senate Version
•AB 8 requires the Health & Human Services Agency to develop fitness, wellness and health promotion programs; pay for performance standards in all state programs; and best practices standards for treatment of chronic diseases.
•SB 48 does not.

COMPROMISE: Assembly Version

10.REQUIRED EVALUATION
•AB 8 and SB 48 both require an evaluation on the progress of the Act, but with different required elements.

COMPROMISE: Senate Version

11.TITLE OF THE PURCHASING POOL:
•SB 48: The Connector
•AB 8 : The California Cooperative Health Insurance Purchasing Program (Cal-CHIPP)

COMPROMISE: Assembly Version