Health Care Reform in California Steven P. Wallace, Ph.D. UCLA Center for Health Policy Research & UCLA School of Public Health UCLA Center for Health Policy Research & UCLA School of Public Health UCLA Extension Beyond the Headlines Series January 29,

The Problem 2006 Health Care Spending in the US –$2.1 trillion –16% of GDP –$7,026 per person

Yet millions have no coverage 46.6 million Americans (15.9%) are uninsured –Both adults and children –Led by declines in employer insurance

CA rates worse than national average Source: U.S. Census, Current Population Survey 2007

California also losing work-based insurance Source: California Health Interview Survey

Why insurance matters, kids time since last MD visit Source: California Health Interview Survey

Why insurance matters, adults no usual source of care Source: California Health Interview Survey

U.S. vs. other health care systems Ellen Nolte and C. Martin McKee, Measuring The Health Of Nations: Updating An Earlier Analysis, Health Affairs, Vol 27, Issue 1, 58-71

Copyright ©2008 by Project HOPE, all rights reserved. Ellen Nolte and C. Martin McKee, Measuring The Health Of Nations: Updating An Earlier Analysis, Health Affairs, Vol 27, Issue 1, U.S. vs. other health care systems

What is to be done? Last comprehensive national proposal by Clinton in 2003 –Too complicated, well-financed groups against Last major health care expansion = State Children’s Health Insurance Program, 1997 –Low income kids only –Expansion vetoed by President Bush, 2007

States as policy innovators California SB2, 2003 –Legislature passed law requiring most employers to provide health insurance –Overturned in 2004 referendum w/Davis recall (51% - 49%) Outspent $18 million against, $15 million for Against: Restaurant Assoc, Walmart, McDonalds For: SEIU, CA Teachers Assoc, United Food Workers

Most recent effort ABX1 1 Governor + legislative leaders Attempt to cover most (70%) of uninsured Californians = 3.6 million Mixture of employer incentives, individual mandates, and subsidies Some new taxes to pay for subsidies Planned to start 2010

Headline?

Key Features- employers Employer “pay or play” –Offer health insurance to workers or pay 1%- 6.5% of payroll into pool to cover employees; based on size of firm

Key Features – public insurance Expands public coverage –Healthy Families increase coverage from 250% poverty to 300% poverty –New Medi-Cal coverage for childless adults up to 250% poverty –These programs are paid 50% by state and 50% by federal government

Key Features - individuals Individual mandate (affordable) –All persons without insurance are required to buy it (like car insurance) –Special private plans for those whose cost of coverage is greater than 5% of income (for those <250% poverty or) –Tax subsidy to help those with incomes 250% - 400% of poverty

Key Features – insurance co’s Insurance companies can not refuse to sell policies (guaranteed issue) Simplified insurance policy options (5, ala Medicare) Requires companies to spend 85% of premiums on services (“loss ratio”)

Key Feature - revenues New revenues in addition to employer $$ 4% hospital tax $1.75/pack additional cigarette tax County tax contributions All of the above require voter approval; planned for November 2008 ballot

Contending Solution Senator Kuehl – Single Payer Coverage Similar to “Medicare for All” Eliminates all marketing expenses New worker (3-4%) and employer (8%) tax, in lieu of health insurance premiums Everybody would be treated the same, 100% coverage, uniform benefits Governor vetoed in 2006

Politics (vs. Policy) Republican governor w/no party support in legislature but large public appeal Democratic legislature w/o enough votes to pass taxes alone or override governor Business with low wage employees oppose; some unions support Economic downturn spooked everyone Kuehl withdraws support for Gov’s plan

The next headline? Nothing in California until the next governor and legislature, at a minimum National initiatives depend on who wins the White House and the composition of Congress Until then, look for more headlines about the uninsured and the U.S. lagging other countries in health care performance.

Useful web sites UCLA Center for Health Policy Research California Legislative Analyst’s Office Health Access California Health Care Foundation California Speaks