ALLIANCE FOR HEALTH REFORM, STATE COVERAGE INITIATIVES BRIEFING, WASHINGTON, D.C., OCTOBER 26, 2007.

ALLIANCE FOR HEALTH REFORM, STATE COVERAGE INITIATIVES BRIEFING, WASHINGTON, D.C.,

OCTOBER 26, 2007.

NEW AMERICA FOUNDATION AND CA HEALTH CARE REFORM

D.C. and California-based nonprofit and nonpartisan

think tank

Met with and advised Governor Arnold Schwarzenegger and

his staff from outset

Concepts and research on individual mandate, “hidden tax”

on the insured (Len Nichols and Peter Harbage), and shared

responsibility used by administration and credited to NAF.

UNIVERSAL COVERAGE: CALIFORNIA’S ADVANTAGES

Strong citizen support for health care reform (77% concerned

they can’t pay for cost of major illness; 70% percent think system

needs major change; 72% back Governor’s plan; 61% in favor of

Democrats’ pay-or-play bill (A.B. 8/ Nunez-Perata)

Support or interest in comprehensive reform from labor, big business (Silicon Valley Leadership Group), small business (67% of owners polled feel employers should contribute), insurers, and hospitals (CA Hospital Assn. supports Governor’s plan)

High-profile and activist governor negotiating with powerful

unions and health advocacy groups

UNIVERSAL COVERAGE:CALIFORNIA’S CHALLENGES

High rates of uninsured; relatively low rates of existing employer-based coverage4.9 million without insurance; 6.5 million, or over 20% of population, without coverage

during year; CA employer coverage dropped from 64 to 54% from 1987 to 2005.

Political structure: undemocratic and archaic two-thirds rule needed for legislature to pass budget and any bills that raise taxes. 52-day Republican holdout over passing budget stalled momentum for health reform

Additional federal funding needed to finance reform, rather than MA “use it or lose it”; ERISA issues

Friction between Governor, G.O.P. minority in legislature, and labor over different health care proposals, notably affordability and business contribution

AFFORDABILITY IS CRITICAL

PROPORTION OF TOTAL FAMILY INCOME SPENT ON PREMIUM AND OUT-OF POCKET COSTS, NON-EMPLOYMENT BASED, 2007.

For middle income, affordability involves both what one “can” and “should” pay

“Health Care Expansion in California: What Can Consumers Afford to Spend?” U.C. Berkeley Center for Labor Research and Education and the UCLA Center for Health Policy Research, September 2007

THE MISUNDERSTOOD MANDATE?

Opposition to individual mandate in Governor’s plan a sticking point

Mandates and regulations will begin to reform individual insurance market away from risk selection in direction of competition on value

Guaranteed issue by insurers relies on mandates

Leaving out mandate compromises universality

Affordable benefit package must be available before individual mandate is enforced

Sensible and feasible outreach strategies and auto-enrollment will make enforcement, penalties rare

HOW THINGS STAND NOW

Special legislative session on health and

water policy convened mid-September;

Governor’s proposal put in legislative

language early October: too little, too late?

California Labor Federation (state AFL-CIO)

opposing Governor’s plan outright; Democrats

and labor lukewarm at best

Assembly hearing scheduled 10/31/07

WHERE DOES CALIFORNIA GO FROM HERE?

One ballot initiative, none, or several?

Financing: lottery, sales tax, property

tax reform, cost containment, or what?

Subsidies and the employer payroll

tax: Splitting the difference?

“Nixon to China”? A deal can be cut:

will leaders compromise and risk

antagonizing their bases?