California Braces for TerminatorCare

Thursday, 04 Oct 2007 09:51 AM

By Rod Proctor

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California Gov. Arnold Schwarzenegger appears to be closing in on what would be a rare achievement for a Republican governor: providing universal health care coverage to his state's citizens.

One possible roadblock, however: State legislators in the governor's own party are none too happy about it.

Following the lead of GOP presidential hopeful Mitt Romney, a former Massachusetts governor, Schwarzenegger appears close to striking a deal with a Democratic-controlled Legislature to make health coverage both mandatory and affordable for his state's 6.5 million uninsured.

The Legislature passed a version of the plan in mid-September. Schwarzenegger vetoed it, however, citing higher-than-desired employer costs attached to his proposed $12 billion plan. But he then immediately announced a call for a special session of the Legislature to reach an accord.

Now it's simply a matter of striking a deal with California Democrats.

"We have made tremendous progress on this issue during the past session and have found considerable common ground," he said in his veto announcement. "That is why I intend to call a special session of the Legislature so that we can finish the job of truly reforming our health care system."

Much like the Massachusetts plan, Schwarzenegger's approach would include a mix of economic incentives and requirements affecting insurance companies, employers, doctors, hospitals, and individuals. It also would involve an increase in the state sales tax, a proposal likely to appear on California's November 2008 ballot.

Schwarzenegger's plan has received blistering criticism from California Republicans, however.

Michael Villines, the Assembly’s GOP leader, tells The Washington Post that the plan is a "one-way road to disaster."

"They [Schwarzenegger and the Democrats] have to own it, not the Republicans," he says. "They have to convince Californians that they are not taxed enough now."

Similarly, Michael Cannon of the libertarian Cato Institute recently wrote in the National Review that the plan is a "thinly veiled shakedown that is both dishonest and emblematic of what ails America's health care system."

Centerpiece

"The centerpiece of TerminatorCare," he wrote, "is a requirement that every California resident purchase health insurance. Though many call this an individual mandate, that's just a fancy term for a sort of tax."

Many groups that traditionally would oppose such government efforts have signed on to the governor's plan, however.

In recent weeks, the California Hospital Association, the Los Angeles Area Chamber of Commerce, and the San Jose-Silicon Valley Chamber of Commerce all endorsed the plan.

Two major sticking points remain: how much employers would pay into the plan, and how illegal immigrants would be affected.

Both Schwarzenegger and the Democrats want children of all immigrants -- regardless of legal status -- covered under the plan, as well as all immigrants employed by the state.

The Democratic-controlled Legislature wants employers who don't offer employee care to toss at least 7.5 percent of their payroll into a state fund that would help subsidize private health insurance. Schwarzenegger wants that figure capped at 4 percent. Many expect that gap to be closed during the Legislature's special session, which convened in late September.

Assembly Speaker Fabian Nunez, a Democrat, is confident that an agreement is near.

"I think I see light at the end of the tunnel," he tells the Post. "I think the insurance industry has got to take a haircut. The hospitals pay a fee. Employers pay a fee. Workers pay a share. And then we're going to have to go out and hustle the voters for a sales tax to make up the difference."

The chances of winning voter support for the tax appear to be good.

A poll by the nonprofit, nonpartisan Public Policy Institute of California found that 72 percent of residents and 65 percent of likely voters strongly support of the plan.

"We hope to have a bill very, very soon," Schwarzenegger's spokesman Aaron McLear tells the Post. "It's just a matter of closing the last few inches."

Taxes in California can be raised through only two ways: a two-thirds vote of the Legislature, which appears unlikely, or by popular ballot.

Opposition

Opposition from business groups that decry the cost to employers, and from consumer groups who don’t see the measure as going far enough, have slowed the bill. But the recent endorsements are expected to help ease the way to agreement.

This isn't the first time Schwarzenegger has riled the base of his party. His opposition to efforts at blocking access by illegal immigrants to state services and embrace of President Bush's immigrant worker plan had the party faithful heckling him during campaign rallies last year.

And on the contentious issue of gay unions, Schwarzenegger has for some time voiced strong support for full rights for domestic partners. As a result, observers see little new political downside for Schwarzenegger in the health care fight.

"I don’t think Schwarzenegger has ever been known as a lockstep national Republican," Nathan Gonzales, political editor of the Rothenberg Political Report, tells Newsmax. "He's never been someone who always agrees with the leadership of his party, so for him to take a different stance isn't entirely surprising."

University of Virginia political scientist Larry Sabato, who recently wrote A More Perfect Constitution: 23 Proposals to Revitalize Our Constitution, goes even further.

"The GOP is so unsuccessful in California that Arnold -- their only big winner for many years -- has enormous latitude to move toward the middle or to the left," he tells Newsmax. "Republicans grumble, but are they really going to deny [anything] to the only guy who has been able to win under their party label?

"No doubt the anti-tax and anti-immigration factions of the GOP are unhappy with the governor, but they have little recourse at the moment."

And Sabato offers a possible clue to Schwarzenegger's motivations on this and other issues: "He's governor of a liberal blue state, and his next political objective may well be defeating Democratic Sen. Barbara Boxer in 2010 and going to the U.S. Senate. So his health care proposal is aimed at the California electorate, and at the crucial independent voters he needs to have any chance at unseating a Democrat."

Other States Working Health Care

Meanwhile, California is just one of many states trying to improve the condition of their health care plans.

Missouri's Republican Gov. Matt Blunt recently unveiled a series of proposals to expand coverage to nearly 200,000 more people. Some 700,000 in the state are thought to be uninsured.

Blunt's plan would phase in subsidized coverage over two years by seeking bids from private insurers to help fill the coverage gap.

The plan would be paid for by a combination of state taxes, special Medicaid taxes, and federal matching funds, the Kansas City Star reports.

Also, in June Missouri's Legislature approved a measure to make it easier for employees to take their insurance coverage with them when they leave a job.

"This increases health insurance portability -- employees can take their insurance policies with them from job to job knowing that their premiums will be pre-tax and that their employers can contribute to them," insurance industry veteran Tom Rogala tells Newsmax. "This is the type of reform that other states should be considering."

In a nutshell, Schwarzenegger's health care proposal:

  • Requires employers with 10 or more full-time workers to spend at least 4 percent of Social Security wages for employee health care, or pay an offsetting fee to the state.

  • Creates a health care pool for those with incomes below 250 percent of the federal poverty level.

  • Requires all individuals to purchase health coverage.

  • Places a 4 percent fee on hospitals and a 2 percent fee on doctors to cover a rise In Medicare reimbursements.

  • Expands coverage to children in families with incomes under 300 percent of the federal poverty level, regardless of immigration status.

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