Health plans divide allies

Governor faces big political fight
By Harrison Sheppard, Sacramento Bureau, LA Daily News

SACRAMENTO – Even as Gov. Arnold Schwarzenegger has been lauded for his ambitious effort to provide health care to all Californians, he faces formidable obstacles in seeing it succeed.

Schwarzenegger wants to share the billions in extra costs among individuals, employers, doctors, insurers, hospitals and government.

But at least four competing proposals from Democratic and Republican lawmakers have emerged, and elements of Schwarzenegger’s plan have alienated some of his traditional allies in the business and anti-tax communities.

Immediately after his plan was announced, a coalition of labor and health groups, including the California Labor Federation, denounced it, saying it doesn’t require businesses to pay enough and will force low-income families to buy coverage they can’t afford.

“I think both politically and legally he has a fight,” said Jon Coupal, president of the Howard Jarvis Taxpayers Association.

Political analysts say the governor is well-positioned for any battle because he faces little political risk – he cannot run for re-election as governor and is constitutionally prohibited from running for U.S. president.

“He’s got nothing else to lose,” said Barbara O’Connor, director of the Institute for the Study of Politics and the Media at California State University, Sacramento.

Ultimately, if any final health care coverage proposal moves forward, it could look significantly different from anything currently on the table.

“What’s most important to the governor is not a particular plan, but a shared responsibility,” said Kimberly Belshe, the governor’s secretary of Health and Human Services.

“Everyone needs to contribute so everyone can benefit. He’s not saying it’s my plan or no plan.”

The biggest challenge will start with Democratic lawmakers, who control both houses of the Legislature.

Leaders of both houses – Assembly Speaker Fabian Nu ez, D-Los Angeles, and Senate President Pro Tem Don Perata, D-Oakland – have each written their own health care proposals, as has Senate Health Committee chairwoman Sen. Sheila Kuehl, D-Los Angeles.

The two legislative leaders’ plans are complex, though not as extensive as Schwarzenegger’s. They both focus on covering working Californians, rather than all residents.

They both would also impose new fees on employers who don’t provide employee coverage, and contain a variety of insurance market reforms and cost-containment efforts.

Like Schwarzenegger’s, both also provide coverage to children of undocumented immigrants.

Kuehl’s plan calls for a single-payer universal health care system, in which all Californians would pay into the system and all would receive coverage through a new government agency.

Last year, the Legislature approved Kuehl’s bill, but Schwarzenegger vetoed it, saying he did not want to create a system of “socialized medicine.” She plans to reintroduce the same bill in late February.

Perata said he expects all of the proposals to get full consideration this year. He and Nu ez have discussed the possibility of sending all of them to a conference committee to develop a single proposal that meets widespread approval.

“We want a thorough airing of everybody’s ideas,” Perata said. “We’re precluding nothing.”

Kuehl has criticized several elements in the governor’s plan and says his proposed new fee on companies with more than 10 employees only affects about 20 percent of the state’s businesses.

“The governor’s plan is not comprehensive in virtually any way,” Kuehl said. “Simply saying you have to buy insurance doesn’t make it a reality.”

Schwarzenegger is likely to have an even more difficult time negotiating with members of his own party and the business community.

Republican lawmakers plan to introduce their own health care proposal this week that will involve financial incentives to employers that provide health coverage.

It will also look at improving access to health care services, is not expected to impose any new costs on businesses, and will not provide new benefits for illegal immigrants.

Sen. George Runner, R-Lancaster, one of the key authors of the Republican plan, sees no reason to rush into a solution this year.

“I think it’s going to take the next couple of years to work it out,” Runner said. “I don’t think it can be as comprehensive as the governor envisions. We appreciate his vision, but we just don’t think the resources are truly available.”

Schwarzenegger also has run afoul over his proposed charges on doctors, hospitals and employers. The governor says the charges are fees – not taxes – and therefore require a simple majority vote in the Democratic-controlled Legislature.

But critics say his plan is a tax and requires a two-thirds vote. The Howard Jarvis Taxpayers Association is considering a legal challenge.

Some of the state’s wealthiest interests, including big employers, hospitals and doctors, could fund opposition.

California Medical Association President Anmol Mahal said the group likes the governor’s general goal of extending coverage, but it does not like the proposed 2 percent fee on physicians’ gross revenue.

“Why did the governor put the doctor tax in there?” Mahal said. “They’re obviously looking for innovative funding streams. If it was their intent to get our attention, it certainly did get our attention.”

Officials with the California Chamber of Commerce – one of Schwarzenegger’s staunchest allies in the past – calls the plan a tax on business and fears the 4 percent payroll charge could be increased if health care costs outstrip salary increases.

Last week, the pro-business group Consumer Alliance for a Strong Economy released a television ad featuring an animated, quacking duck as an announcer cites a list of groups that call Schwarzenegger’s plan a tax.

The ad urges the public to “Call the governor today and tell him if his plan looks like a tax, and sounds like a tax, it must be a tax – one that Californians cannot afford.”

Conservative groups have an ally at least on that single point. Kuehl agrees that the governor’s proposal, like her own single-payer plan, is a tax that requires a two-thirds vote.

“I don’t know how you can impose something on doctors and hospitals and not call it a tax,” Kuehl said.

Administration officials said regardless of whether Schwarzenegger’s plan gains support, he is serious about including all parties in the discussion.

“He needs a legacy and he wants a legacy,” said analyst Sherry Bebitch Jeffe of the University of Southern California.

“It’s a challenge for him. He’s always liked challenges. And I do think he understands this is an issue around which he can rally diverse groups, particularly if he maintains the `post-partisan’ mind-set.”

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