If Gov. Arnold Schwarzenegger manages to get his universal health care package past the California Legislature, he will become a real action hero for the 4.8 million Californians who lack health care at any given moment, as well as insured residents who live in fear of losing both their jobs and their health plans.
He would be a superhero if he found an honest way to pay for it. State Health and Human Services Secretary Kim Belshe noted that Schwarzenegger believes "the opportunity is this year."
There is much to like in the governor's package. Plan Schwarzenegger calls for "shared responsibility" and "shared benefit:" It would not only provide access to health care to all Californians, but also require that all Californians sign onto a health care plan.
Under this plan, the state would provide health care for poor children and free care for adults whose income falls below the federal poverty level through Medi-Cal. Those with incomes of up to 250 percent of the poverty level will be eligible for subsidized coverage through a state-run insurance pool. Adults who earn more than that would have to buy private coverage.
Plan Schwarzenegger would encourage employers to provide health coverage through private HMOs and insurers. Those employers with 10 employees or more who don't provide health care for their workers would have to pay a 4 percent payroll tax (officially it's an "in-lieu fee") into a state health-care insurance fund.
Many critics fear that 4 percent is too low because it is less than what employers pay in premiums today -- and that, in order to save money, some employers might leave their private insurance plans and switch to the state pool. In June, the Assembly passed a measure, authored by Speaker Fabian Nunez, which would require all employers pay 7.5 percent payroll tax, but would not require all self-employed or uninsured Californians, who can afford to buy their own coverage, to do so.
The most revolutionary idea is Schwarzenegger's proposal to make the state reimburse health care providers the full cost of Medi-Cal services. For decades, states and the federal government have paid for their big promises by forcing doctors and hospitals to treat government-plan patients at a loss -- a cost that is passed on to private plans.
While many have argued that cost-shifting to fund the uninsured drives up the cost of private care, the California Chamber of Commerce's think tank recently found that low reimbursement rates from Medicare and Medi-Cal force health care providers to shift costs to private plans -- to the tune of 10.8 percent of private premiums, as opposed to 1.4 percent to pay for the uninsured.
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