Jan. 4 (Bloomberg) — A year ago, California Governor
Arnold Schwarzenegger pledged to provide health insurance for
everyone in the largest of the United States. The halting
progress of his $14 billion-a-year plan since then shows the
power of interest groups to resist change.
Businesses are fighting a new payroll tax to fund coverage.
Consumer groups are wary that subsidies for the poor may be too
stingy. WellPoint Inc.s Blue Cross of California, the states
biggest health insurer, opposes a requirement that insurers
provide policies regardless of medical history.
All of the candidates for president left standing after
yesterdays Iowa caucuses have offered proposals to improve the
nations health care, and their campaigns may be keeping a close
eye on Sacramento. Schwarzeneggers effort, whether it succeeds
or fails, exposes the roadblocks that any attempt to revamp the
current U.S. health-care system will have to overcome.
“California is a wonderful object lesson to anyone who
would be president, Joe Antos, a policy analyst with the
American Enterprise Institute in Washington, said in an
interview. “Parochial interests will rise to the top of any
health-care process, especially one thats a big, expensive
reform.
Republican Schwarzenegger put all of his political muscle
behind his health-care initiative, and he is still only one-
third of the way to success. The Democratic-controlled state
Assembly passed the plan in December. The state Senate, also
with a Democratic majority, will hold its first committee
hearing on Jan. 16.
Voter Approval
Then California voters would have to approve the plans
financing in November. Schwarzenegger, 60, had to take the
proposal to the ballot because he didnt get any Republican
backing in the Assembly, leaving him short of the two-thirds
approval needed for any new tax.
“No matter how you construct a health-reform plan, its
going to gore someones ox, said Garry South, a Democratic
political consultant in California. “While people may publicly
applaud you, they sit around in backrooms and plot to kill it.
Schwarzeneggers plan resembles those offered by leading
Democratic presidential candidates. He promises to cover almost
all of the states 6.5 million uninsured, who make up about 14
percent of the 47 million people in the U.S. lacking coverage.
Federal insurance programs for the poor would be expanded
in California to include low-income, childless adults, who
usually dont qualify now. Adults with incomes up to $43,000 for
a family of three would get subsidized coverage. Those making up
to $69,000 would get tax credits for premium costs
exceeding 5.5 percent of income.
Subsidies
Families with incomes up to $51,500 would get state-
subsidized insurance for their children, regardless of whether
they are in the U.S. legally.
Insurers couldnt refuse to cover people with medical
conditions and couldnt charge them higher rates. The companies
would have to spend 85 cents of every dollar collected on care.
Funding would come mostly from a higher tax on cigarettes,
a new payroll tax for businesses that dont offer insurance to
their employees and a new fee on hospitals.
Supporters of the measure as its written include the
states second-, third- and fourth-largest insurers –nonprofit
Kaiser Permanente, publicly traded Health Net Inc.
and nonprofit Blue Shield of California — along with labor
unions and Steve Burd, chairman of supermarket chain Safeway
Inc.
Assembling a Coalition
Schwarzeneggers ability to assemble such a coalition
shows attitudes have evolved since President Bill Clinton and
then-First Lady Hillary Clinton, now a Democratic presidential
candidate, failed in 1993 to overhaul U.S. health care, said
Bill Wehrle, senior legislative representative for Oakland-based
Kaiser Permanente.
“I dont think there is anyone who, 15 years later, feels
better about the state of health care, Wehrle said.
At the same time, resistance to the governors plan among
some Democrats underscores difficulties the Democratic
presidential candidates would face delivering on their health-
care promises. The state Senates leader, Democrat Don Perata,
said on Dec. 17 that given Californias projected $14 billion
budget deficit, the financing of Schwarzeneggers plan will need
close scrutiny.
Meanwhile, the 75,000-member California Nurses Association
wants to eliminate private insurance for a “single-payer
government plan. The California Medical Association,
representing 35,000 doctors, says it is too soon to take a
position.
Financial Soundness
“We need to make sure that this package is financially
sound and improves access to quality health-care, said Richard
Frankenstein, the associations president, in an e-mailed
statement.
Blue Cross, owned by Indianapolis-based WellPoint, created
the Coalition for Responsible Healthcare Reform to fight the
measure. Small businesses and restaurant owners say they cant
afford to insure workers and shouldnt be punished with a tax.
“I take care of myself and my family, but its not my
responsibility to take care of other people, said Sean Fisher,
owner of three Tile Outlet stores in the Sacramento area.
For all the uncertainty, Schwarzeneggers powers of
persuasion provide a model for how to manage a national overhaul
of the health-care system, said senior adviser Daniel Zingale.
“Health-care reform has always collapsed into civil war,
and what the governor did was break that by putting people
together in the same room, Zingale said in an interview.
“Its been a tale of compromise, and in the best sense.
To contact the reporter on this story:
Aliza Marcus in Sacramento, California, at
