What Will It Cost to Reform California Health Care?

State lawmakers are considering competing plans to reform healthcare in California. These plans aren't a nip here and a tuck there. They're radical surgery to the way medicine is delivered in the state. KPCC's Julie Small reports a cure is possible... but it won't be easy and it won't be cheap.

Julie Small: It's expensive to have six-and-a-half million Californians without health insurance. No insurance means you probably get your medical care at the emergency room, the most expensive care there is. The bill's in the billions, and, says Governor Arnold Schwarzenegger:

Governor Arnold Schwarzenegger: Who pays for all of this? It's you you you! All of us who are lucky enough to have coverage. That's who pays. The people with insurance pay a hidden tax through higher deductibles, higher costs, higher premiums, higher co-pays.

Small: The Governor says you and every other Californian with health insurance pay about $1100 a year to cover the Californians without. He figures if you insure the uninsured, the bill wouldn't go away, but it would get a lot smaller. Coverage for all, says Schwarzenegger, costs $5 billion a year. If employers chipped in 4% of their payrolls, hospitals 4% of their profits, and doctors 2%, the bill's covered.

The governor calls those charges "fees." The non-partisan Legislative Counsel calls them "taxes." Taxes won't fly in Sacramento, and Assembly Speaker Fabian Nuñez (D-Los Angeles) says that's why Democrats have a better shot.

Assemblyman Fabian Nuñez: We're trying to be realistic. We're trying to be reasonable. We're trying to stick to the math.

Small: The health reform bills championed by Nuñez and Senate leader Don Perata cover about two-thirds of uninsured, including all the children. They'd cost about $8 billion, but an analysis by MIT says the amount the state would collect from employers would exceed the costs.

The Nuñez plan would require businesses to spend 7.5% of the payroll on insurance, or give the equivalent to a government-run purchasing pool. Sound like a lot? Most employers spend 13% now.

Nuñez: So it's a pretty good plan. It's very strong. It isn't single payer. It isn't a full universal health plan, but I think it's the next best thing to it that has real legs.

Small: Real, maybe, but those legs are wobbly. Assembly Republican leader Mike Villines (R-Clovis) agrees that California needs to fix health care, but he's not convinced these plans will do it.

Assemblyman Mike Villines: In the health care debate, not one entity has been willing to get into what is driving the costs of health care up. We're simply jumping to a solution, which is very dangerous. If you do that in your own personal life, or in your business life, you're making a gamble on your entire company or your entire savings. You don't jump to a solution. You should identify and solve that cost problem and then make the policy choice.

Small: Villines says requiring employers to provide health care will either hold down wages or move businesses out of state. Still, Villines is optimistic that 2007 can still be the year of health care reform.

Villines: Absolutely. I mean, it's gonna take a compromise. But I think there's a place where Republicans and Democrats can get to, where you're not raising taxes, you're not raising fees. But you're able to expand government programs for those that are truly needy, and you can expand the government pool for those people. And that should be a general fund cost, if that's the priority of the state, it shouldn't be new taxes or new fees. It should be the state saying we'll honor that. And if we don't have surplus to pay for it, then we shouldn't be able to do it.

Small: They won't do it right away. The state budget, which has to be passed and signed by the end of June, comes first. After that's done, legislators have given themselves until September to cure what ails health care in California.

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