BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Sheila J. Kuehl, Chair
BILL NO: SB 840
S
AUTHOR: Kuehl
B
AMENDED: As Introduced
HEARING DATE: April 18, 2007
8
FISCAL: Appropriations
4
0
CONSULTANT:
Patterson/cjt
SUBJECT
Single payer health care coverage
SUMMARY
This bill would establish the California Universal
Healthcare System (CUHS) under which all California
residents would be eligible for specified health care
benefits. The CUHS would, on a single payer basis,
negotiate for or set fees for health care services provided
through the system, and pay claims for those services. The
bill would also establish various boards and offices, with
duties as specified, related to the administration of the
system.
CHANGES TO EXISTING LAW
Existing law:
Existing federal and state law establishes several publicly
financed health insurance programs, including Medicare,
Medi-Cal, and the Healthy Families program, that provide
health coverage to eligible individuals and families,
including children, the aged, blind, and disabled, and
pregnant women.
Existing law also provides for the regulation of private
health care service plans by the Department of Managed
Continued---
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Health Care (DMHC), and health insurance policies by the
California Department of Insurance (DOI).
This bill:
This bill would establish the CUHS to provide health
insurance coverage to every California resident. The bill
would prohibit the sale of any private health care service
plan or health insurance policy in the state, and would
make the CUHS the primary payer for health care services in
California.
This bill would establish a new state agency, the
California Universal Healthcare Agency (CUHA), which would
oversee the CUHS and receive all federal, state and local
monies paid with respect to the applicable provisions of
state and federal law. The CUHA would be comprised of the
following entities:
The Universal Healthcare Policy Board
The Office of Patient Advocacy
The Office of Health Planning
The Office of Healthcare Quality
The Universal Healthcare Fund
The Public Advisory Committee
The Payments Board
Partnerships for Health
System governance
The bill would provide for the appointment of a
commissioner of the CUHA by the Governor subject to
confirmation by the Senate. The appointed commissioner
would be the chief officer of the agency, and would
establish the CUHS budget, set goals, standards and
priorities for the system, set rates, appoint specified
officers and directors within the system, and promulgate
generally binding regulations concerning implementation of
the CUHS. The bill would require the commissioner to be
subject to conflict of interest provisions two years prior
to, during, and for two years following his or her service.
The bill would assign duties to the commissioner, including
the oversight and establishment of integrated service
delivery networks, an enrollment system, a system-wide
electronic claims and reimbursement system, a system of
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secure electronic medical records, a referral system, and
health planning regions. The commissioner would also be
required to develop a system budget, to determine the
appropriate levels for a reserve fund for the system, to
implement specified cost control measures, to negotiate and
set rates, fees and prices, and to oversee measures to
ensure quality of care.
Lastly, the bill would require the commissioner to seek all
reasonable means to secure a repeal or waiver of any
provision of federal law that preempts any part of the bill
and, in the event that preemption is not waived, would
require the commissioner to promulgate conforming
regulations.
The bill would also establish the Universal Healthcare
Policy Board, to establish goals and priorities for the
system, establish the scope of services to be provided to
patients, and establish guidelines for evaluating the
performance of the system, its officers, the health
planning regions and providers. These guidelines would
include measures to ensure public input.
The bill would establish a Public Advisory Committee to
advise the Board on all matters related to the system.
Members of the committee would be appointed by either the
Governor, the Senate Committee on Rules or the Assembly
Speaker, and would represent a range of providers,
including physicians, nurses, hospitals, allied health
professionals, clinics, other providers; and other
stakeholders, including consumers, labor, and business.
The bill would establish an Office of Patient Advocacy,
headed by a patient advocate appointed by the commissioner,
to represent the interests of patients in order to secure
the health care services and benefits to which they are
entitled and to advocate for, and represent the interests
of, patients in the governance bodies created under the
Act. The patient advocate would additionally be required
to establish and maintain a grievance process, as defined,
to receive and respond to consumer complaints regarding the
system, and to develop educational and informational guides
for consumers to inform them of their rights and benefits
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within the system.
SB 840 would establish the Office of Health Care Planning
and assign the director of the office various duties,
including evaluating regional budget requests, estimating
the health care workforce, health disparities,
infrastructure needs required to meet the health care needs
of the population in accordance with the goals and
standards set forth by the commissioner, and other duties
as specified.
The commissioner would be required to establish the Office
of Health Care Quality, headed by the chief medical
officer, in order to support the development of high
quality, coordinated heath care services, establish
processes for measuring the quality of care delivered in
the health insurance system, and establish a means to make
changes needed to improve health care quality. The bill
would assign various duties to the chief medical officer,
including establishing evidence-based standards of care to
serve as guidelines to support health care providers. The
chief medical officer would be required to identify,
measure, and prevent medical errors within the system, and
to recommend to the commissioner a benefits package based
on clinical efficacy for the system, including priorities
for needed benefit improvements.
Additionally, the bill would require the chief medical
officer to establish a separate grievance system, separate
from that of the Office of Patient Advocacy, for all
grievances involving the delay, denial, or modification of
health care services, and to establish an independent
medical review system, as specified.
The bill would establish, within the Office of the Attorney
General, the Office of the Inspector General for the CUHS
who would be appointed by the Governor subject to Senate
confirmation. The Inspector General would be granted broad
powers to investigate, audit and review the financial and
business records of individuals and entities that provide
services or products to the system or are reimbursed by the
system.
Transition
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The bill would require the system to be operational no
later than two years after it has been determined that the
Universal Healthcare Fund has sufficient revenues to fund
the costs of implementing the bill's provisions. The bill
would require the transition to be funded from a loan from
the General Fund and from other sources, including private
sources identified by the commissioner. A transition
advisory group comprised of the officers of the system,
specified stakeholders and health care policy experts, and
representatives from all existing departments and agencies
affected by establishment of the system, would be
established to advise the commissioner on all aspects of
implementation of the CUHA.
Regional Planning
This bill would require the commissioner to establish up to
10 health planning regions comprised of geographically
contiguous counties grouped according to specified criteria
including patterns of health utilization, health needs of
the population, geography, population and demographic
characteristics.
The commissioner would be required to appoint a director
for each region who would be required to identify and
prioritize regional health care needs and goals, assess
projected revenues and expenditures to ensure fiscal
solvency of the system at a regional level, establish and
implement a regional capital management plan and operating
budgets, and undertake other duties as specified.
The bill would require each regional planning director to
appoint a regional planning board to advise the director on
regional health policy and to appoint a regional medical
officer who would administer the regional Office of
Healthcare Quality. The regional medical officer would
also be required to assure the evaluation and measurement
of quality of care delivered in the region, and to perform
other specified duties.
Eligibility
The bill would deem all California residents eligible for
the CUHS, and would base residency on physical presence in
the state with the intent to reside. This bill would also
state legislative intent for the system to provide health
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care coverage to state residents who are temporarily out of
the state.
The bill would provide that visitors to the state who
receive care under the CUHS will be billed for all services
rendered. Additionally, the bill would deem individuals
who are eligible for health benefits from California
employers but working in another jurisdiction to be
eligible for benefits under the CUHS if they make certain
payments. This bill also would provide that individuals
who arrive at a health facility unable, because of physical
or mental conditions, to document eligibility shall be
deemed eligible for services.
Benefits
The bill would provide that any eligible individual may
receive services under the system from any willing
professional health care provider. Covered benefits would
be defined under the bill to include all medical care
determined to be medically appropriate by the patient's
health care provider, including but not limited to:
inpatient and outpatient health facility services;
inpatient and outpatient professional health care
provider services by licensed health care professionals;
diagnostic imaging, laboratory services, and other
diagnostic and evaluative services;
durable medical equipment including prosthetics,
eyeglasses, and hearing aids and their repair;
rehabilitative care;
emergency transportation and necessary transportation for
health care services for disabled indigent persons;
language interpretation and translation for health care
services;
child and adult immunizations and preventive care;
health education;
hospice care;
home health care;
prescription drugs listed on the formulary;
mental and behavioral health care;
dental care;
podiatric care;
chiropractic care;
acupuncture;
blood and blood products;
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emergency care products;
vision care;
adult day care;
case management and coordination to ensure services
necessary to enable a person to remain in the least
restrictive setting;
substance abuse treatment;
care of up to 100 days in a skilled nursing facility
following hospitalization;
dialysis; and
benefits offered by a bona fide church, sect,
denomination, or organization whose principles include
healing entirely by prayer or spiritual means.
This bill would allow the commissioner to expand benefits
beyond the minimum outlined above when expansion meets the
intent of the statute and can be sufficiently funded.
The bill would exclude specified services from coverage by
the CUHS health care services that are determined by the
commissioner and chief medical officer to have no medical
indication, including services primarily for cosmetic
purposes, private rooms in inpatient health facilities, and
services of a provider or facility that is not licensed by
the state. The bill would prohibit co-payments and
deductibles for preventive care or when prohibited by
federal law.
The bill would require individuals enrolling in integrated
health care systems to retain membership for at least one
year after an initial three-month evaluation period during
which they could withdraw at any time. The bill also would
require patients to have a referral from a primary care
provider to see a specialist, except that referrals would
not be needed to see a dentist and allows a specialist to
serve as the primary care provider if the provider agrees
to coordinate the patient's care.
For the first six months of system operation, the bill
would provide that no specialist referral shall be required
for patients who had been receiving care from a specialist
prior to initiation of the system. This bill would allow a
patient to appeal the denial of a referral through the
dispute resolution mechanism established by the
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commissioner.
Budgeting and financing provisions
The bill would establish the Universal Healthcare Fund
(UHF) within the State Treasury administered by a director
appointed by the commissioner. The bill would provide that
all claims for health care services rendered pursuant to
the system shall be submitted to the UHF via an electronic
claims and payment system.
The bill would require the UHF director to establish a
system account and a reserve account. The system account
would be required, at all times, to hold an amount
estimated in the aggregate to provide for the payment for
all losses and claims for which the system may be liable.
The bill would require the UHF director to immediately
notify the commissioner when trends indicate that
expenditures for the system may exceed revenues and to
immediately notify the Legislature and the public regarding
the possible need for cost control measures. The bill
would specify the types of cost control measures the
commissioner could implement, including changes in the
system of health facility administration that improve
efficiency, postponement of introduction of new benefits or
benefit improvements, imposition of co-payments and
deductibles under specified circumstances, imposition of an
eligibility waiting period if the commissioner determines
that people are immigrating to the state for the purpose of
obtaining health care through the system, and other as
specified.
The bill would provide that at the regional level, if the
commissioner or regional planning director determines that
regional revenue and expenditure trends indicate a need for
regional cost containment, specified cost control measures
may be followed.
The bill would provide that if the Budget Act has not been
enacted by June 30th of any year, all moneys in the reserve
account of the Universal Healthcare Fund would be used to
implement the bill's provisions until funds became
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available through the Budget Act. The bill would also
require the Controller to make one or more General Fund
loans to the fund for the purposes of making payments for
health care goods and services, if the reserve funds are
exhausted
The commissioner would be required to establish a budget
for all expenditures, specifying a limit on total annual
state expenditures and establish regional allocations to
cover a three-year period. The commissioner would be
required to limit the growth of spending on a statewide and
regional basis with reference to average growth in state
domestic product across multiple years, population growth,
advances in technology, and other factors. Additionally,
the bill would require the commissioner to adjust the
system budget so that aggregate spending for the state
would not exceed spending under this division by more than
five percent.
The bill would require the commissioner to project the
system's revenues and expenditures pursuant to specified
factors and to convene an annual conference of system
officers and representatives of the governance system to
discuss projections and possible policy directions. The
commissioner would also be required to establish specified
budgets for various components of the health care system
and shall include various adjustments including
cost-of-living differences between regions, health risk of
enrollees, workforce development needs, and projected
savings due to improved access and efficiency of care
delivery, among others variables.
This bill would require the commissioner to seek necessary
approval so that all current federal payments for health
care are paid directly to CUHS, which would then assume
responsibility for all benefits and services paid by the
federal government with those funds. This bill would also
require the commissioner to establish formulas for
equitable contributions to CUHS from counties and other
local government agencies.
The bill would provide that the system be secondarily
responsible for providing care to the extent that the
federal, state, or county programs are not transferred to
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the system. Additionally, the bill would require the CUHS
to cover Medicare share of cost expenses to the extent that
the commissioner obtains authorization to incorporate
Medi-Cal or Medicare revenues into the UHF.
This bill would provide that until a single public payer
for all health care in the state is established, health
care costs shall be collected from "collateral sources"
including insurance policies, health plans, employers,
employee benefit contracts, government benefit programs,
judgments for damages, and any liable third party.
Health care providers
Under the bill, the commissioner would be required to
establish a Payments Board that is responsible for
negotiating reimbursements and establishing a uniform
payments system for health care providers and managers not
part of health delivery systems, essential community
providers, and group medical practices.
The bill would also require the Payments Board to negotiate
compensation for upper level managers subject to specified
guidelines, and to report annually to the commissioner on
the status of health care provider and upper level
management reimbursement including satisfaction with
reimbursement levels and the sufficiency of funds
allocated.
The bill would allow providers to choose to be compensated
by the system or by persons to whom they provide services,
in which case they may establish charges for their
services. Providers who accept any payment under this
division would not be allowed to bill a patient for any
covered service. Providers electing to be compensated
under fee-for-service would be required to choose
representatives of their specialties to negotiate
reimbursement rates with the Board consistent with the
state action doctrine of the federal anti-trust law.
The bill would require provider compensation to be
actuarially sound and include a just and fair return for
health care providers. The bill would require physicians
to be reimbursed for all services provided pursuant to the
CUHA. The bill would require payment schedules that would
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be in effect for three years, and for bonus payments
associated with specified performance standards and goals
for the system including service to medically underserved
areas.
The bill would allow all licensed and accredited health
care providers in the state to participate in the CUHS, and
would prohibit a provider from refusing to care for a
patient based on discrimination. The bill also would allow
individuals to select a primary care
provider, and women to select an obstetrician-gynecologist
in addition to a primary care provider.
Under the bill, integrated health delivery systems,
essential community providers, and group medical practices
that provide comprehensive, coordinated services would be
required to negotiate operating budgets with regional
planning directors and would be allowed to choose to be
reimbursed on the basis of a capitated system or a
non-capitated operating budget that covers all costs of
providing health care services. The bill would prohibit
payments from capitated or non-capitated operating budgets
to pay for capital expenses, with specified exceptions.
Health systems operating under capitated or non-capitated
budgets would be required to immediately report any
projected operating deficits to the regional planning
director who would then evaluate whether to make an
adjustment in the operating budget.
The bill would provide that margins generated under a
health system's operating budget could be retained and used
to meet the health care needs of the population,
conditioned upon specified restrictions. Health facilities
operating under system operating budgets would be allowed
to raise and expend funds from sources other than the
system including, but not limited to, private or foundation
donors for purposes related to the goals of the system.
Funding of health facilities and equipment
The bill would direct the commissioner to perform a
system-wide assessment of existing capital health care
assets, prioritize short- and long-term capital needs, and
develop a multi-year capital management plan, according to
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specified criteria, to govern all capital investments and
acquisitions undertaken. This bill would require the
commissioner to develop and maintain capital inventories on
a regional basis and to establish a process whereby those
intending on making capital investments or acquisitions
would be required to prepare a business plan, as specified.
The bill would require the establishment of a competitive
bidding process, as described, for the development of
capital management plans that meets the needs of the system
and provides that the system may fund, partially fund, or
participate in seeking funding for those capital projects.
The bill prohibits capital investments from being made from
operating budgets.
This bill would require the regional planning directors to
develop a regional capital development plan pursuant to the
CUHS capital management plan established by the
commissioner. The bill would require regional planning
directors to make financial information available to the
public when the system's contribution to a capital project
is greater than $25 million, and would require the
commissioner to establish conflict of interest requirements
in regard to capital outlays made by the system.
Purchase of prescription drugs
Under the bill, the commissioner would be required to
establish a budget for the purchase of prescription drugs
and to use the purchasing power of the state to obtain the
lowest possible prices for prescription drugs. This bill
also would require the commissioner to establish a budget
to support research and innovation recommended by the
system to support the goals and standards of the system.
The commissioner would also be required to establish a
budget to support the training, development and continuing
education of health care providers and the health care
workforce needed to meet the health care needs of the
population.
Health care premiums
The bill would establish the California Universal
Healthcare Premium Commission, comprised of specified
representatives including health finance experts, business
and labor representatives, and state tax department
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representatives to determine the aggregate costs of
providing health care coverage pursuant to the CUHA, and to
develop an equitable and affordable premium structure, as
described, that would generate adequate revenue to support
the system and ensure actuarially sound funding for the
system.
The Premium Commission would be authorized to obtain grants
from and contract with individuals and entities and receive
charitable contributions or any other lawful source of
income in order to perform its function. The Premium
Commission would be required to seek structured input from
representatives of stakeholder organizations, policy
institutes, and other expertise to ensure it has the
necessary information to perform its function.
Additionally, the bill would require that the Premium
Commission be supported by a reasonable amount of staff
time provided by the state agencies with membership on the
commission.
FISCAL IMPACT
Unknown significant state costs to administer the single
payer system, and to provide health care benefits as
specified in the bill. These costs would be partially
offset by savings from the redirection of funds from
existing state and local health coverage programs. In
2005, the Lewin Group conducted a cost and economic impact
analysis of a bill similar to this one and estimated
program expenditures under the single-payer program would
be approximately $166.8 billion if fully implemented in
2006, increasing to $261.8 billion in 2015. This assumes
existing state and federal law would be changed to transfer
spending on government health programs to the single payer
system.
BACKGROUND AND DISCUSSION
Purpose of Bill
According to the author, this bill would provide fiscally
sound, affordable health care to all Californians, provide
every Californian the right to choose his or her own
physician, and control health cost inflation. The author
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states that the single greatest problem facing California's
health care system and economy is the growing cost of
health insurance. As evidence, the author cites research
that demonstrates most of the newly uninsured come from
solidly middle-class families. The author also cites
unsustainable increases in health care premiums noting that
health insurance premiums have increased 87 percent since
2000, and although wages have only increased by 20 percent
over this period, the average employee contributes 143
percent more to their company-sponsored health insurance.
The author states that overall, health care costs have
outpaced increases in wages by a ratio of 4:1 since 2000.
The author notes that California spent an estimated $186
billion in health care last year, and that this amount is
sufficient to provide every resident of the state with
excellent health care, and ensure fair and reliable
reimbursements to doctors, nurses and other providers. The
author states that a single payer universal health care
system is the only long-term way to address the issue of
unsustainable growth in spending, arguing that private
insurance companies are not innovators when it comes to
cost management - they are, instead, innovators only when
it comes to risk aversion. The author also cites studies
demonstrating that nearly half of all health care spending
is misspent on administrative and clinical waste related to
the fragmentation of the current system. Other studies
highlighted by the author find that 30 percent of every
health care dollar is wasted on administrative overhead,
alone.
The author argues that under a single payer system,
California would consolidate the administrative waste of
thousands of health plans - saving the system nearly $20
billion in the first year. In addition, the author states
that a single payer system would emphasize preventative and
primary care and allow California to use its purchasing
power to negotiate discounts for prescription drugs and
durable medical equipment.
The author cites the Lewin Group analysis stating, that a
single payer health care system could achieve universal
coverage while reducing total health spending in
California. Additionally, the author argues that SB 840 is
the gold-standard for health reform in California because
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it offers truly universal health care since eligibility is
based on residency, not on employment or income. The
author states that this provides affordable coverage,
involving no new spending, because the plan will be paid
for by federal, state and county monies already being spent
on health care and by affordable insurance premiums that
replace all premiums, deductibles, and co-pays now paid by
employers and consumers.
The author states that SB 840 will combine needed cost
controls with high medical standards, and place an emphasis
on preventative and primary care to improve California's
overall health in a way that also saves billions of
dollars.
Uninsured Californians
According to the California Health Care Foundation (CHCF),
approximately 6.6 million people are uninsured in
California, and the number of uninsured continues to rise
as employer-sponsored health insurance declines. CHCF
reports that approximately 40 percent of uninsured workers
are employed by small businesses, and the number of
uninsured workers in mid-sized firms continues to rise.
Additionally, although families with incomes below the
poverty level are most likely to be uninsured, more than 30
percent of the uninsured have family incomes of more than
$50,000. Nearly 75 percent of uninsured children are in
families where the head of the household has a full-time
job. CHCF also reports that Latinos represent more than
half of California's uninsured population and are more
likely to be uninsured than any other ethnic group. Of the
total number of uninsured, Asians comprise 20 percent,
African Americans comprise 18 percent, and Caucasians
comprise 13 percent.
Related legislation
SB 1014 (Kuehl), a companion to SB 840, this bill would
impose a health care coverage tax on the wages of an
employee that would be paid by both the employee and the
employer, and direct revenues generated from these taxes to
fund the California Health Insurance Fund that would be
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created by SB 840. This bill is set for hearing in the
Senate Health Committee on April 18, 2006.
SB 48 (Perata) proposes a health care reform plan designed
to insure all working Californians and their dependents, as
well as all children regardless of residency status in
households with incomes up to 300 percent of the federal
poverty level. This bill is set for hearing in the Senate
Health Committee on April 25, 2007.
AB 8 (Nunez) proposes a health care reform plan designed to
insure all working individuals and dependents employed by
firms of two or more employees, all children, regardless of
residency status, with household incomes up to 300 percent
of the federal poverty level, and eventually low-income
childless adults. This bill is set for hearing in the
Assembly Health Committee.
SB 236 (Runner) would enact the Cal CARE program to
increase access to health care services in the state and
provide health coverage incentives. This bill is currently
in the Senate Rules Committee.
Prior legislation
SB 840 (Kuehl, 2006), would have implemented a system
substantially similar to that proposed by this year's SB
840. This bill was vetoed.
AB 772 (Chan, 2005) would have created the California
Healthy Kids Insurance Program, to expand health care
coverage to all California children. This bill was vetoed.
SB 921 (Kuehl, 2004), also would have implemented a system
substantially similar to that of this year's SB 840. SB
921 was held in the Assembly Health Committee.
SB 2 (Burton), Chapter 673, Statutes of 2003, enacted the
Health Insurance Act of 2003, to provide health coverage to
employees (and in some cases their dependents) who do not
receive job-based coverage and who work for large and
medium employers. SB 2 was repealed by Proposition 72, a
voter referendum on the November 2004 ballot.
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Arguments in support
Supporters argue that over 6.5 million Californians lack
health insurance coverage, health care costs continue to
rise at double digit rates, and comprehensive reform, such
as that proposed by SB 840, is the only effective solution
to those problems. Supporters argue that lack of insurance
coverage prevents people from getting affordable care when
they need it and that despite enactment and expansion of
public programs such as Medi-Cal and the Healthy Families
program, millions of Californians, most of them working
adults, remain uninsured and cannot obtain health coverage.
Supporters state that SB 840 would cover everyone because
eligibility is based on residency, instead of on employment
or income, and that no California resident would ever again
lose their coverage because of unaffordable insurance
premiums, because he or she changes or loses a job, or
because he or she has a preexisting medical condition.
Supporters assert that this bill requires no new spending,
and would save businesses, families and the government
billions of dollars. They argue that our current health
care system wastes 30 percent of every health care dollar
on complicated benefit schemes, enrollment procedures, and
access limitations, and that this bill will ensure that
money goes to care and not administration by mandating that
the system spend 95 percent of health care dollars on
actual care.
Supporters assert that SB 840 provides real choice to all
consumers who will have complete freedom to choose their
health care providers rather than working within
restrictive HMO networks. In light of patient choice,
delivery of care will remain the same under this bill - a
competitive mix of public and private providers. Lastly
supporters argue that SB 840 will improve quality by
expanding a system-wide use of medical standards that place
an emphasis on preventative and primary care.
The County Health Executives Association of California
(CHEAC) has taken a "support if amended" position. CHEAC
states that counties should be relieved of the health
portion of Health and Welfare Code Section 17000,
considering that with the implementation of universal
health coverage, there will no longer be a need for this
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requirement on counties. Additionally, CHEAC argues that
local public health funding must be preserved, and that
health realignment revenues dedicated to communicable
disease control, epidemiology, public health laboratories,
and public health nursing should be maintained at the local
level.
Arguments in opposition
Opponents state that costs associated with this bill would
create an expensive labyrinth of bureaucracy, and that
competition among private companies leads to lower costs
and better care. Opponents assert that a socialized
state-run health care system would eliminate these
companies, thereby forcing people to rely upon the state to
take care of their health needs, and limiting medical
advances because of decreased competition. Opponents argue
that this bill would extend taxpayer obligations too far,
result in rampant fraud, waste and mismanage public
services, and damage the state's competitiveness for jobs.
They state that a major portion of the health care system
created by this bill would be paid for through increased
taxes which would discourage business growth, and hurt
state investments, and that that out-of-state individuals
would move to California to take advantage of the new
health care system adding to the state's economic burden.
Opponents disagree with the premise that a single payer
system will generate substantial savings from lowered
administrative costs and profits, as administrative costs
will not be eliminated under a single payer system. They
assert that competitive forces in the marketplace are vital
in health care, and that while California's premiums have
increased, they are still lower than other large markets.
Opponents cite cases in Canada where waiting times to see
general practitioner increased by 72 percent, and where
some provinces sent patients to the U.S. to have heart
surgery as a result of long wait times.
The California Medical Association (CMA) states the bill
may create unintended consequences that could hurt patient
care and the practice of medicine. CMA states that the
bill allows for a decrease in benefits to cover revenue and
shortfalls, leaving open the possibility to reduce benefits
from what a standard Medi-Cal or commercial plan now
offers. The CMA also cites concerns that the premium
STAFF ANALYSIS OF SENATE BILL 840 (Kuehl) Page
19
commission created by this bill has a concentrated
authority to decide benefit design, provider payments, and
cost-sharing that may not benefit patients. Lastly, the
CMA states that a single-payer system may limit the ability
of doctors to make autonomous decisions about courses of
treatment.
COMMENTS AND QUESTIONS
1.Contracting ability. The bill does not provide explicit
authority for the commissioner to contract out for
services relating to enrollee eligibility or claims
processing. A recommended amendment would be to allow
the commissioner to contract out for these services upon
findings that doing so would create efficiency and
cost-savings to the system.
Suggested amendment:
a.Page 13, line 39 after the period, insert:
The commissioner may contract with a third party for
eligibility and enrollment services if the commissioner
finds that doing so would meet the system's goals and
standards, and result in greater efficiency and cost
savings to the system.
b.Page 14, line 4 after the period, insert:
The commissioner may contract with a third party for claims
and payment services if the commissioner finds that doing
so would meet the system's goals and standards, and result
in greater efficiency and cost savings to the system.
1.Bifurcated patient grievance process. The bill
bifurcates the patient grievance process between the
chief medical officer and the Office of Patient Advocacy,
which may confuse patients desiring to file grievances.
The intent of having the chief medical officer handle
grievances relating to the denial, delay or modification
of health services is to remain abreast of issues
relating to access and quality of care. However, a
recommended amendment would be to have the Office of
STAFF ANALYSIS OF SENATE BILL 840 (Kuehl) Page
20
Patient Advocacy assume responsibility for the handling
of all patient grievances, and to report to the chief
medical officer on grievances relating to the denial,
delay or modification of health services to ensure the
chief medical office can fulfill his or her role in
assuring access and health care quality.
Suggested amendments:
a.Delete Section 140608 in its entirety.
b.Page 20, lines 28 - 30:
(5) Participate in the grievance process and independent
medical review system on behalf of consumers pursuant to
Sections 140608 and 140609 Section 104610.
c.Between page 75, line 32 and page 87, replace the words
"chief medical officer" with "patient advocate."
d.Page 75, line 32:
104610. (a) The chief medical officer patient advocate of
the Office of Patient Advocacy, in consultation with the
chief medical officer, shall establish a?
e.Page 76, line 10 - 20:
(4) (A) Provide for a written acknowledgment within five
calendar days of the receipt of a grievance , except as
noted in subparagraph (B) . The acknowledgment shall advise
the complainant of the following:
(i) That the grievance has been received.
(ii) The date of receipt.
(iii) The name, telephone number, and address of the system
representative who may be contacted about the grievance.
(B) Grievances received by telephone, by facsimile, by
e-mail, or online through the system's Internet Web site
that are resolved by the next business day following
receipt are exempt from the requirements of subparagraph
(A) and paragraph (5). The chief medical officer patient
advocate shall maintain a log of all these grievances. The
log shall be periodically reviewed by the chief medical
officer patient advocate and shall include the following
information for each complaint:
STAFF ANALYSIS OF SENATE BILL 840 (Kuehl) Page
21
f.Page 87, line 38 after the period, insert:
140620. The patient advocate shall, on a biannual basis,
report to the chief medical officer on the number, types,
and outcomes of all patient grievances relating to the
denial, delay or modification of health services.
1.Suggested technical and clarifying amendments:
a.Page 10, lines 7-8:
...be determined pursuant to the same process as provided
in established by the California Citizens Compensation
Commission in accordance with Section?
b.Page 13, lines 3-4:
(d) Oversee the establishment of real and virtual locally
based integrated services networks , including those that
provide services through medical technologies such as
telemedicine, that include physicians in?
c.Page 13, line 35:
?California residents, including those that travel
frequently out of state ; those?
d. Page 20, lines 28-30 (this proposed amendment becomes
unnecessary if the amendments suggested in #2 are adopted):
(5) Participate in the grievance process and independent
medical review system on behalf of consumers pursuant to
Sections Section 104608 and 104609 .
e. Page 27, lines 32-33:
?providers, and patients, oversee the establishment of real
and virtual locally based integrated service networks of ,
including those that provide services through medical
technologies such as telemedicine, that include physicians
in fee-for-service, solo and group?
f. Page 31, line 40
STAFF ANALYSIS OF SENATE BILL 840 (Kuehl) Page
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...under this division that are is currently provided by
those programs.
g. Page 32, lines 37-39:
(7) adjustment to the reimbursement compensation of
managerial employees and upper level managers of under
contract with the system to correct for deficiencies in
management and failure to meet contract performance goals.
h.Page 37, line 19:
(1)upper level managers employed in by, or under contract
with, private health care..
a. Page 39:
Reverse the order of subparagraphs (4) and (5)
b.Page 39, line 19:
(8) Health care providers who accept any payment from the
system under this?
c.Page 40, line 33:
(j) Reimbursement to health care providers and compensation
to managers may?
d.Page 41, line 17:
...level managers employed by, or under contract with,
integrated health care delivery?
e.Page 41, lines 21-23:
(b) Health care providers and upper level managers employed
by , or under contract with, systems that provide
comprehensive, coordinated health care services shall be
represented by their respective employers or contractors
for the?
f.Page 79, line 36:
STAFF ANALYSIS OF SENATE BILL 840 (Kuehl) Page
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?with or employed by the system, has recommended a drug,
device
POSITIONS
Support: California Federation of Teachers (co-sponsor)
California Nurses Association (co-sponsor)
California School Employees Association (co-sponsor)
California Teachers Association (co-sponsor)
Health Care for All (co-sponsor)
Alameda Health Consortium
Alliance for Democracy - San Fernando Valley Chapter
Altschuler Clinic - A Center for Weight Loss and
Wellness
American Federation of State, County, and Municipal
Employees
American Federation of State, County, and Municipal
Employees, Chapter 36
American Nurses Association California
Applied Research Center
Association of California Caregivers Resource
Centers
CA Advocates for Nursing Home Reform
CA Alliance for Retired Americans
California Association of Public Authorities for
In-Home Supportive Services
California Catholic Conference
California Church IMPACT
California Commission on the Status of Women
California Faculty Association
California Labor Federation
California Pan-Ethnic Health Network
California Physicians Alliance
California Public Interest Research Group
California Retired Teachers Association
Central Labor Council of Butte & Glenn Counties
City of Santa Cruz - City Clerk's Department
City of Santa Cruz - Mayor and City Council
City of West Hollywood
Coalition for Humane Immigrant Rights of Los Angeles
CoHousing Partners
STAFF ANALYSIS OF SENATE BILL 840 (Kuehl) Page
24
Consumer Federation of California
County Health Executives Association (if amended)
Davis Office Systems
Democratic Central Committee of Santa Barbara County
Effective Assets
First 5 Children and Families Commission, Marin
Friends Committee on Legislation of California
Gray Panthers
Health Access California
Health Care for All California - Santa Barbara
County
Health Care for All Californians
Health Care for All Santa Cruz City
Health Care for All South Bay/Long Beach
Independent Employees of Merced County
JERICHO
Kramer Translation
Lambda Letters Project
League of Women Voters, California
League of Women Voters, Long Beach Area
League of Women Voters, North and Central San Mateo
County
League of Women Voters, San Joaquin County
LifeLong Medical Care
Los Angeles Free Clinic
Lutheran Office of Public Policy - California
Mexican American Legal Defense and Education Fund
National Asian Pacific American Women's Forum
National Association of Social Workers
National Association of Working Women
Newsom & Fitzpatrick Medical Group, Inc.
Older Women's League of California
Organization of SMUD Employees
Pacific Palisades Democratic Club
Planned Parenthood Affiliates of California
San Diego County Court Employees Association
San Francisco for Democracy
San Luis Obispo County Employees Association
Santa Rosa City Employees Association
Service Employees International Union
Service Employees International Union, United
Healthcare Workers
Sierra Friends Center
Sober Living Network
STAFF ANALYSIS OF SENATE BILL 840 (Kuehl) Page
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South Bay Center
South of Market Project Area Committee
St. Mary's Center
Sutter County Democratic Central Committee
Torrance Democratic Club
United Electrical, Radio and Machine Workers of
America, UE Local 1421
United Methodist Women
United Nations Association - USA & UNESCO Santa
Barbara County
Chapters
Wellstone Democratic Renewal Club
Women For: Orange County
Women's Foundation
Women's International League for Peace and Freedom
Three individuals
Oppose: America's Health Insurance Plans
Association of California Life & Health Insurance
Companies
Blue Cross of California
Blue Shield of California
California Association of Health Plans
California Association of Health Underwriters
California's Benefits Specialists
California Chamber of Commerce
California Medical Association
Cal-Tax
Capitol Resource Institute
Health Net
Howard Jarvis Taxpayers Association
Kaiser Permanente
National Association of Insurance and Financial
Advisors of California
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