Like water, health insurance has become a topic of a special session, after the 2007 Regular Session ended with the Governor indicating he was going to veto AB 8 (Nunez) -- which he did.
The idea of establishing a state run health insurance program started with SCA 26 (Kehoe) in 1917. It would have established a health insurance system applicable to persons, and their dependents, whose income it was deemed insufficient to meet hazards of sickness and disability. Support for such a system would have been through contributions, voluntary or compulsory, from such persons, employers and by state appropriation. It would have provided implementation of the program by a commission or court created by the Legislature. The purpose of the amendment was to give health insurance the same status which workers' compensation had constitutionally. It appeared on the 1918 ballot as Proposition 20 and failed by a vote of 133,858 to 358,324.
It was not until the 1930s that the idea of health insurance, paying a fee to guard against a major personal catastrophe, came to the forefront. The Los Angeles County Medical Association reached an agreement with the Metropolitan Water District to provide health care for its employees in 1930. In 1937, the Alameda County Medical Association developed one of the first plans in order to prevent the closure of hospitals when people were unable to pay their bills. Participating employers and their employees set aside a small amount each month to guard against the day when hospitalization might be necessary. In 1937, Henry J. Kaiser hired physicians to provide medical care for workers and families and has reorganized into a separate corporate structure, Kaiser Permanente, which now offers health plans to both the private and public sectors.
On the legislative front, SB 454 (Dan E. Williams) of 1935 would have provided universal health care for all Californians. However, it died in a Senate policy committee. In 1937, AB 1132 (Cronin) was chaptered into law, providing for a public nonprofit hospital services plan, and creating a public corporation with a statutorily defined board of directors and mission, but which had the flexibility of a private organization. That same year, AB 1283 (Welsh) was introduced which would have authorized the California Medical Association to create its own voluntary health prepayment plan in each county. It failed passage on the Assembly Floor, was given reconsideration, and died at the end of the session.
In 1939, the California Medical Association voted to form a nonprofit membership corporation, which later became Blue Shield. It offered prepaid monthly membership to patients who would receive care from member physicians. Patients received medical coverage for $2.50 a month, not including hospitalization. The California Medical Association indicates approximately 20,000 patients signed up in 1940.
In 1945, Governor Earl Warren proposed a statewide health insurance plan -- SB 500 (Salsman) and AB 800 (Wollenberg) -- by creating a payroll-tax-funded single payer plan. SB 500 died in the Senate Government Efficiency Committee, and AB 800 died in the Assembly Health Committee after a motion to withdraw from committee failed 39-38. A competing plan, AB 449 (Vincent Thomas) also died in the Assembly Health Committee after a motion to withdraw failed in 1949. President Truman failed to get a nationwide universal health care proposal off the ground. By the late 1940s, employers began to offer health insurance as a "non cash" benefit to compete for employees.
In 1965, as political pressure mounted for some form of universal coverage, President Lyndon Johnson was able to have Congress pass Medi-care and Medicaid assuring comprehensive health coverage to approximately 20% of the people. In California, the Legislature enacted, and Governor Edmund G. "Pat" Brown signed into law the state's equivalent health plan which is now known as Medi-Cal.
By 1970, with the expansion of coverage and the demand for health care increasing, the costs of health care were growing at a rate faster than the cost-of-living. In order to control these costs, the idea of utilization control was born and thus began the health maintenance organizations, or what is known as HMOs.
In 1971, the first set of Medi-Cal reforms were enacted under AB 949 (Campbell) which encouraged enrollment in prepaid health programs by reducing fee-for-service utilization (reduced reimbursement, prior authorization, and visit limitation). However, the program ran into major fraud problems. To solve these problems, the Knox-Keene Act of 1976 was enacted establishing the regulatory framework for licensing and regulating HMOs. Returning to the national level, the Nixon Administration, in 1971, proposed universal coverage through a mix of public and private reforms without success.
In the 1980s and 1990s, health insurance premiums continued to rise and many American families found themselves uninsured. In 1993, President Clinton pushed unsuccessfully for a federal universal coverage plan.
In the 1990s, initiatives concerning health insurance were placed on the California ballot --Proposition 166 of 1992 and Proposition 186 and 214 of 1996 -- and were rejected by the voters.
In 2003, the Legislature successfully passed and Governor Gray Davis signed SB 2 (Speier) which enacted the Health Insurance Act of 2003 that would have provided coverage for approximately one million people through a so-called "pay or play" system. Under that system, specified California employers would be required to pay a fee to the state to provide health insurance (in other words, "pay") for their employees, and in some cases, for their dependents. Alternatively, the employer could choose to arrange directly with the health insurance providers for coverage (in other words, "play") for these individuals. Employers choosing to arrange their own health coverage would receive a credit that would fully offset their fee. In order to qualify for the fee offset, the employer would have to provide specified types of coverage. This law was placed on hold when the measure was put on the November 2004 ballot by referendum and the voters rejected SB 2 going into effect.
Another approach to health care reform, in 2003, came from Senator Sheila Kuehl called the "single-payer" in which the payment for doctors, hospitals and other providers for health care form a single fund. The Canadian health care system is an example of a single-payer system. Under single-payer, a doctor's practice and hospitals may remain private and negotiate for payments with the government. The plan is designed to insure every Californian with comprehensive health care coverage; guarantee the right to choose their own doctors; control the cost of health care; lower the cost of prescription drugs; and preserve the private competitive character of medical care provision. It provides comprehensive medical, dental, vision, hospitalization and prescription drug coverage to every California resident. This broad coverage is made possible through a streamlined claims and reimbursement system. It requires California to use its purchasing power to negotiate bulk rates for prescription drugs and durable medical equipment, such as wheelchairs. It preserves the status of health care providers, hospitals and pharmacies as private, competitive businesses. The plan is funded by drawing in current public spending and replacing all premiums, co-payments and deductibles paid to insurance companies with one affordable premium based on income. Senator Kuehl's SB 840, of 2005-06, was vetoed by the Governor.
As mentioned before, the Governor vetoed the major health bill, in 2007, that was able to make it through the legislative process -- AB 8 (Speaker Nunez and Senate Pro Tempore Perata). AB 8 sought to improve access to the individual insurance market by standardizing medical underwriting and enhancing coverage and eligibility for high risk individuals; sought to improve access to private insurance through major insurance market reforms; expand eligibility for public health programs for children and their parents; and impose cost containment measures such as required preventive services, evidence based care, and administrative expenditure caps. It would have created a statewide purchasing pool -- the California Cooperative Health Insurance Purchasing Program. It would have required employers to elect to spend at least 7.5% of Social Security payroll on health care expenditures, or pay an equivalent fee to a trust fund, and required employees to accept the employer's health expenditures, or enroll in coverage through the purchasing pool.
The Governor has proposed a Health Care Security and Cost Reduction Act. His proposal provides for Californians to obtain coverage and strengthens provisions to increase affordability for working families; creates a tax credit for individuals and families between 250-350% of the federal poverty level; requires employers to offer employees IRS Code Section 125 plans--employers and their employees who choose a Health Savings Account health benefit product will receive tax savings consistent with federal law; guarantees that everyone can get insurance; and increases funding for public hospitals so they can stabilize their finances. The finance plan uses hospital and employer fees, uses funds from federal, state and county governments, as well as from individuals, and uses increased lottery revenues by licensing a professional company to manage the lottery. The proposal protects small businesses by basing contributions on payroll. Under the plan, employers who do not offer health care coverage will make a contribution based upon a sliding scale fee from 0-4% based on their total payroll.
The Senate Republicans who did not support AB 8 have proposed their own plan called the Cal CARE Plus Plan (SB 236-Runner). It proposes to reduce overburdened and expensive emergency room services by expansion of clinics with an emphasis on prevention and primary care medicine. The plan does not mandate that all Californians buy health care coverage, instead the proposal uses tax incentives for individuals, doctors and businesses. Additional incentives include allowing employers to offer flexible work hours should the business provide health care. The plan seeks to bring Medi-Cal rates closer to the federal Medicare program. The plan calls for the Governor and the Legislature to call upon the federal government to pay for the uncompensated and mandated costs of health care for illegals, including those in prisons. Assembly Republicans also have a major health insurance program which consisted of 18 bills in the regular session which provided for giving Californians the choice to choose health savings accounts (AB 84-Nakanishi); offering more health plan choice for Public Employees' Retirement System members (AB 1377 (Nakanishi); empowering Medi-Cal patients to make their own health care decisions (AB 1635-Strickland); allowing individuals to choose their own health insurance benefits (AB 1214-Emmerson); providing more affordable health care choices by expanding competition (AB 1644-Niello); expanding coverage options for the working uninsured (AB 85-Nakanishi); making coverage more affordable by creating a California Health Insurance Exchange (AB 1072-Gaines); enabling small businesses to join together to purchase plans at a discount (AB 1607-Tran); creating a single payer health and workers' compensation policy (AB 1619-Benoit); lowering out-of-pocket health care costs (AB 1040-Duvall); ensuring more convenient care at neighborhood health clinics (AB 1643-Niello); raising Medi-Cal reimbursement rates for doctors (AB 1312-Emmerson); encouraging more doctors to provide charity care (AB 1592-Huff); increasing the number of well-trained nurses (AB 1559-Berryhill); guaranteeing coverage for pre-existing conditions (AB 1378-Nakanishi); boosting resources for medical clinics serving the poor (AB 1572-DeVore); and providing seismic upgrades of hospitals based on structural condition (AB 1304-Smyth).
On November 5, the Democratic leadership unveiled a revision to their health plan which is designed to bridge the differences between the Democrats and the Governor on how much employers would be required to pay and keeping the core principles of AB 8. Specifically, this revised plan:
Establishes an individual mandate for most Californians but exempts people who cannot afford to purchase insurance. Affordability is met when the total cost of health insurance is 6.5% or less of a family income.
Covers all children and parents up to 300% of the federal poverty line.
Covers all single adults through Medi-Cal up to 250% of the federal poverty line.
Provides individuals with incomes 250-450% of the federal poverty line who are not eligible for public programs with an advanceable, refundable tax subsidy to help purchase coverage.
Ensures that nobody earning between 0-150% of the federal poverty line will be required to pay premiums, co-payments, or deductibles.
Requires the Managed Risk Medical Insurance Board to establish the minimum benefits package suitable for coverage in California.
Contains significant cost-containment measurers, including allowing the state to pursue bulk purchasing of pharmaceuticals and requiring transparency from hospitals.
In addition to cost-containment measures, the plan is financed through a combination of fees and taxes, including:
A $2 per pack increase in the tobacco tax.
An employer fee assessed on a sliding scale. Employers with payrolls up to $100,000 will be expected to contribute at least 2% of payroll. Employers with payrolls from $100,000 to $250,000 will be expected to contribute at least 4% of payroll. Employers with payrolls above $250,000 will be expected to contribute at least 6.5% of payroll. In addition, employers will be expected to either offer insurance to part-time employees or contribute to the public purchasing pool for those employees.
A hospital fee assessed at 4% of revenue.
Other major health reform insurance legislation still active in the regular session includes: SB 840 (Kuehl) establishing the California Universal Health Care System based on a single payer system; SB 1014 (Kuehl), a companion measure to SB 840, imposing a health coverage tax on the wages of an employee that would be paid by both the employee and the employer to pay for SB 840; SB 32 (Steinberg) and AB 1 (Laird) expanding eligibility for Medi-Cal and Healthy Families program to include children of families with incomes under 300% of the federal poverty level; AB 12 (Beall) establishing the Adult Health Coverage Expansion Program to provide health care coverage to eligible adults with incomes up to 350% of the federal poverty level, living and employed in Santa Clara County, who are without health care coverage; and SB 48 (Perata) establishing a health care plan designed to insure all working Californians and their dependents, as well as children regardless of residency status in households with incomes up to 300% of the federal poverty level.
While the debate over health insurance reform has taken place, various programs are put in place along with Medi-Cal to provide assistance to as many Californians as possible. These programs include Access for Infants and Mothers; American Indian Infant Health Initiative; Baby-Cal; Breast and Cervical Cancer Treatment, Cancer Screening and Detection Program; California Children's Services; Child Health and Disability Prevention; Denti-Cal; Developmentally Disabled Waiver; Estate Recovery, Family Planning, Access, Care and Treatment; Genetically Handicapped Persons Program; Health Care Program for Children in Foster Care; Health Insurance Premium Payment; Healthy Families; Healthy Kids; High Risk Infant Follow-Up; In-Home Supportive Services; Children's Health Program; Long-Term Care Multipurpose Senior Services Program; Newborn Hearing Screening; Primary and Rural Health Care; Subacute Care Program; and Women, Infants, and Children program.
Even with these programs, it is estimated by most that there are still approximately 6.5 million people without health coverage. That is why stakeholders and policymakers have come together to make reforms to what is considered a broken health system.
Other health insurance legislation signed into law included: SB 192 (Ducheny) making permanent, by eliminating the January 1, 2008 sunset, the authority for Mexican prepaid health plans to provide coverage for Mexican nationals employed in San Diego and Imperial Counties, and not just Mexican citizens, and to hire two medical directors, one that is mandatory and licensed to practice medicine in California for services provided in California, and one that is discretionary, operating under the laws of Mexico, to oversee health services provided in Mexico; AB 328 (Salas) requiring a health plan providing services to persons in Mexico to report specific diseases or conditions to the local health officer, consistent with existing mandatory communicable disease reporting requirements; AB 910 (Karnette) expanding the eligibility criteria under which health plans and insurers must continue coverage for dependents that reach a limiting age (a similar bill, SB 302 (Alquist) was vetoed); AB 1302 (Houston) extending the Health Insurance Portability and Accountability Implementation Act of 2001 until July 1, 2010; and AB 1324 (De La Torre) prohibiting a health plan or health insurer from rescinding or modifying an authorization for services after services are rendered for any reason.
Vetoed health insurance legislation other than AB 8 included: AB 423 (Beall) requiring a health care service plan and health insurance policy to provide coverage for the diagnosis and medically necessary treatment of a mental illness of a person of any age, including a child; and AB 429 (Evans) providing for health care service plans and health insurers to include coverage for a human papillomavirus vaccine.