California’s health care initiative: Insurance at a premium

Today's debate focuses on insurance. Yesterday, Zingale and Wrightdiscussed the basics of Gov. Arnold Schwarzenegger'soverall healthcare initiative. The rest of the week, they willdebate providing coverage for people who can't or won't get it, theexperience of other state plans and the problem at the federallevel.

In reforming our broken health care system, it is important torecognize and fix the problems, and to identify and build on whatworks.

Out of 36 million Californians, more than half—almost 19million—rely on the coverage they get through an employer.Another 10 million-seniors, people with disabilities, children, andin some cases their parents-get coverage through public insuranceprograms like Medi-Cal and Medicare. Health care works best when wecome together to share the risk and cost of health care, either atthe worksite, or through public programs.

What doesn't work? Relatively few Californians—1 million to2 million—buy private coverage as individuals. It is oftenunaffordable, or in certain cases, unavailable, because of"pre-existing conditions." As the Los Angeles Times has reported,insurers often deny Californians coverage for minor ailments oreven their profession, all in an effort to avoid covering peoplewho might actually need care.

The governor has proposed some specific fixes that we support,such as "guaranteed issue" and "community rating" prohibitions toprevent insurers from denying or discriminating against patientsbecause of their health status. But the problem is deeper thanthat: An individual alone simply is powerless against the biginsurance companies. And the governor's proposal leaves too manyindividuals at the mercy of the insurance market and increasingcosts.

For all its flaws, employer-based coverage is what most peoplehave and rely on now, and much of health system is financed throughemployers and employees. But most importantly, employers serve auseful function to pool people together, to leverage purchasingpower and help bargain for better rates.

We support group health coverage, through employers or publicprograms, and the bigger the group, the better. For this reason, wealso support Sen. Sheila Kuehl's (D-Santa Monica) single-payerproposal, SB840, being reintroduced today, which would bringeveryone together into one statewide purchasing pool, withresulting cost savings from simplification, a reduction in themoney spend on administration and profit, increased purchasingpower, better planning and budgeting, and a renewed focus onprevention.

While Gov. Schwarzenegger vetoed that specific bill last year,he is this year supporting some steps to strengthen group coverage,including expanding public programs for all children and pooradults, and creating a subsidized purchasing pool for those justover the poverty level. We hope he embraces the concept of groupcoverage more fully in legislative negotiations. Speaker FabianNunez and Senate President Don Perata have proposals that would seta standard for on-the-job group coverage, while also offeringemployers the choice of buying private coverage for their workersor participating in a statewide plan.

What we can't support is efforts to place the legal andfinancial burden of health coverage onto the individual consumerall alone, as with the proposed "individual mandate."High-deductible plans—which are the only types of plans manyof those subject to the governor's individual mandate will be ableto afford, if at all—are another example of the risk and costof health care being shifted from employers and insurers ontoconsumers and families.

While many of us may be healthy today and not need care, we payinto insurance pools because we know that one of these days, by ageor accident, we will need major medical care—and so we wantthat coverage to be comprehensive, with the cost shared with abroader group. When the system works, that's why it works. Andthat's the premise to build on in reform this year.

Anthony Wright, is the executive director of Health AccessCalifornia, the statewide healthcare consumer advocacy coalition,which hosts a daily bloghere.

Anthony, it is easy for you and I to agree we should not divorce healthinsurance from employment, but the fact is the marriage is about as secureas the latest match between Hollywood stars. Besides, the separation isalready under way. Even so, you're overlooking the fact that the governor'splan actually does a good deal to strengthen the very system you say needsto be preserved.

Rising costs resulting from the hidden tax that people with medicalinsurance pay to subsidize people without it are driving more and moreemployers to drop coverage for employees. According to the CaliforniaHealth Care Foundation, less than 55 percent of Californians received theirmedical insurance through their employment in 2005. That's down from 59percent five years earlier.

But even more to the point, the only way to achieve universal coverage is bypursuing the individual mandate that is a key part of the governor's plan.

The nature of work has changed dramatically in this country in recent years.The old model where people tended to stay in one job for years and coulddepend on that employer to provide health care benefits is far lesspervasive than it used to be.

People are more mobile, independent and entrepreneurial than ever before.It's more common to hold two or more jobs, without spending enough time ateither to qualify for benefits.

The individual mandate called for in the governor's plan - with subsidiesfor those who need financial assistance and tax cuts for employees - is amore realistic approach to getting everyone covered than simply imposing theentire burden on employers. Past reform efforts that put the entire burdenon employers or government - in the case of single payer proposals - weredoomed from the start because the burden was not shared.

The governor's proposal is built upon the foundation of "sharedresponsibility," where everyone - not just business and not just government- is asked to do their part so everyone gets covered and the hidden tax iswiped out.

In the meantime, recognizing that 60 percent of Californians with insurance- excluding those on Medi-Cal - still do get it from their employers, thegovernor's proposal bolsters employer coverage. It does so by reducingcosts through elimination of the hidden tax (the subsidy for the uninsured)and by curbing health care inflation. It also requires employers with 10 ormore workers to contribute 4 percent of their payroll to a state fund sopeople without insurance can buy it at reduced rates.

The governor's proposal is an equitable distribution of responsibility andbenefits. And it is based on common sense and a realistic assessment of thechanging nature of work. It would insure everyone, reward efforts to stayhealthy, and start to wipe out the hidden tax that is a drain on our economyand a financial strain on businesses and hard-working California families.

Daniel Zingale is senior advisor to Gov. Arnold Schwarzenegger and chief of staff to Maria Shriver.