BILL ANALYSIS                                                                                                                                                                                                    


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                                 THIRD READING

          Bill No:  SB 840
          Author:   Kuehl (D), et al
          Amended:  4/30/07
          Vote:     21

           SENATE HEALTH COMMITTEE  :  6-4, 4/18/07
          AYES:  Kuehl, Alquist, Cedillo, Ridley-Thomas, Steinberg,  
          NOES:  Aanestad, Cox, Maldonado, Wyland
          NO VOTE RECORDED:  Negrete McLeod

           SENATE APPROPRIATIONS COMMITTEE  : 10-6, 05/31/07
          AYES: Torlakson, Cedillo, Corbett, Florez, Kuehl, Oropeza,  
            Ridley-Thomas, Simitian, Steinberg, Yee
          NOES: Cox, Aanestad, Ashburn, Dutton, Runner, Wyland
          NO VOTE RECORDED: Battin

           SUBJECT  :    Single-payer health care coverage

           SOURCE  :     California Federation of Teachers
                      California Nurses Association
                      California School Employees Association
                      California Teachers Association
                      Health Care for All

           DIGEST  :    This bill establishes the California Universal  
          Healthcare System under which all California residents will  
          be eligible for specified health care benefits.  The  
          universal system will, on a single payer basis, negotiate  
          for or set fees for health care services provided through  


                                                                SB 840

          the system and pay all claims for those services.  The bill  
          establishes a new administrative structure and provide for  
          oversight of health care operations statewide.

          (See a point by point description of the bill at the end of  
          Arguments in Opposition.)

           ANALYSIS  :    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  
          Health Care (DMHC) and health insurance policies by the  
          Department of Insurance (DOI).

          This bill fundamentally alters the financing of health care  
          in California by shifting the current employer  
          based/multi-payer system to a single financing system.  The  
          bill provides comprehensive medical benefits to every  
          California resident, authorizes participation of all  
          licensed medical providers, incorporates federal and other  
          public programs into the universal system, prohibits the  
          sale of private health insurance and regulates health care  
          costs.  The program will be financed with current  
          government health care funding for incorporated  
          federal/county programs, a payroll tax to replace employer  
          benefit plans and other taxes to replace insurance  

          This bill will be governed by an appointed commissioner  
          charged with establishing the universal system's budget and  
          setting rates, establishing expenditure limits, developing  
          a capital management plan, seeking all necessary waivers  
          and exemptions and establishing equitable distribution of  
          services and financing.  This bill contains the structure  
          and policy for a universal single payer system.  The  
          financing provisions are contained in a companion measure,  
          SB 1014 (Kuehl).

          This bill constrains growth in future spending to match  


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          growth in the state gross domestic product which is  
          expected to be approximately 5.14 percent annually through  
          2015.  By 2015, health care spending under the single payer  
          program will be approximately $68.9 billion less than  
          currently projected ($343.6 billion).  Total savings over  
          the 2006 through 2015 period will be $343.6 million.   
          Savings to state and local governments over this ten year  
          period will be approximately $43.8 billion.

          The bill requires the universal system to be operational no  
          later than two years after it is determined there are  
          sufficient resources to implement the program.  The bill  
          provides authority for a loan from the General Fund to  
          finance transitional costs.

           Prior Legislation

          SB 840 (Kuehl) - 2005-06 Session  .  Would have implemented a  
          system substantially similar to that proposed by this  
          year's SB 840.  The bill was vetoed by the Governor.

           AB 772 (Chan) - 2005-06 Session  .  Would have created the  
          California Healthy Kids Insurance Program to expand health  
          care coverage to all California children.  The bill was  
          vetoed by the Governor.

           SB 921 (Kuehl) - 2003-04 Session  .  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 provide  
          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  

           Related Legislation

          SB 1014 (Kuehl) - 2007-08 Session  .  A companion to SB 840,  
          this bill imposes 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  


                                                                SB 840

          taxes to fund the California Health Insurance Fund that  
          would be created by SB 840.  

           SB 48 (Perata) - 2007-08 Session  .  Proposes a health care  
          reform plan designed to insure all working Californians and  
          their dependents, as well as children regardless of  
          residency status in households with incomes up to 300  
          percent of the federal poverty level.

           AB 8 (Nunez) - 2007-08 Session  .  Proposes a health care  
          reform 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.

           SB 236 (Runner) - 2007-08 Session  .  Enacts the Cal CARE  
          program to increase access to health care services in the  
          state and provide health coverage incentives.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  Yes

                          Fiscal Impact (in thousands)

           Major Provisions             2007-08           2008-09           
           2009-10               Fund

           State/county net                               ($1,000,000)  
           ($2,800,000)      GF/county

          Transition loan                $6,000

           SUPPORT  :   (Verified  6/4/07)

          California Federation of Teachers (co-source)
          California Nurses Association (co-source)
          California School Employees Association (co-source)
          California Teachers Association (co-source)
          Health Care for All (co-source)
          Access to Independence 
          Alameda County Public Health Department 
          Alameda Health Consortium 


                                                                SB 840

          Alameda-Contra Costa Transit District
          Alliance for Democracy - San Fernando Valley Chapter 
          Alliance of Retired Americans - West Side Chapter Los  
          Altschuler Clinic - A Center for Weight Loss and Wellness
          American Civil Liberties Union
          American Civil Liberties Union 
          American Federation of State, County and Municipal  
          American Federation of State, County, and Municipal  
            Employees Retirees, Chapter 36 
          American Federation of Teachers California Federation of  
          American Federation of Television and Radio Artists 
          American Nurses Association California
          Applied Research Center
          Association of California Caregivers Resource Centers
          Butte County Health Care Coalition 
          Board of Supervisors of Marin County 
          California Advocates for Nursing Home Reform
          Califonria Alliance for Retired Americans
          California Association of Public Authorities for In-Home  
            Supportive Services
          California Catholic Conferences
          California Church IMPACT
          California Faculty Association 
          California Foundation for Independent Living Centers 
          California Healthcare Institute 
          California Labor Federation
          California Pan-Ethnic Health Network 
          California Physicians Alliance 
          California Professional Firefighters 
          California Public Health Association - North
          California Public Interest Research Group 
          California Retired Teachers Association 
          California Senior Legislature - State of California 
          California Teamsters Public Affairs Council 
          Castro Valley Democratic Club - Resolution 
          Central Labor Council of Butte & Glenn Counties
          City and County of San Francisco Department on the Status  
          of Women 
          City of Berkeley - City Clerk Department 
          City of Capitola 
          City of Santa Barbara - Office of the Mayor 


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          City of Santa Cruz - City Clerk's Department 
          City of Santa Cruz - Mayor and City Council 
          City of West Hollywood - Resolution of the City Council 
          Coalition for Humane Immigrant Rights of Los Angeles  
          CoHousing Partners
          Communications Workers 
          Community Clinic Consortium 
          Community Collaborative for Youth 
          Community Homeless Alliance Ministry 
          Congress of California Seniors 
          Consumer Attorneys of California 
          Consumer Federation of California
          Consumers Union 
          County Health Executives Association (if amended)
          Davis Joint Unified School District 
          Davis Office Systems
          Dean Democratic Club of Silicon Valley 
          Democratic Action Club of Chico
          Democratic Central Committee of Santa Barbara County
          Democratic Club of Santa Maria Valley 
          Democrats of the High Desert 
          Demos Democratic Club of Hayward 
          Dental Health Foundation 
          Effective Assets 
          El Cerrito Democratic Club 
          Equality California 
          Family Resource Network of Santa Cruz County
          First Congregational Church of Long Beach   
          First 5 Children and families Commission, Marin
          Friends Committee on Legislation of California 
          Grass Valley Friends Meeting of the Religious Society of  
          Gray Panthers 
          Gray Panthers - Berkeley - East Bay 
          Greater Lodi Area Democrats 
          Green Party of California 
          Green Party of Alameda County 
          Green Party of Butte County 
          Health Access California
          Health Care for All Californians 
          Health Care for All - Marin 
          Health Care for All - San Gabriel Valley 
          Health Care for All California - Santa Barbara


                                                                SB 840

          Health Care for All Santa Cruz City 
          Health Care for All Sonoma County 
          Health Care for All South Bay/Long Beach
          Howard L. Berman - Congress of the United States House of  
          Independent Employees of Merced County 
          Independent Living Center - San Gabriel Valley 
          Insure the Uninsured Project 
          Interfaith Council of Contra Costa County 
          Kramer Translation 
          Lambda Letters Project
          Latino Coalition for a Healthy California
          Latino Health Access
          Latino Issues Forum
          League of Women Voters, California 
          League of Women Voters, Diablo Valley
          League of Women Voters, Fremont, Newark, and Union City 
          League of Women Voters, Humboldt County 
          League of Women Voters, Long Beach Area
          League of Women Voters, North and Central San Mateo County
          League of Women Voters, Oakland 
          League of Women Voters, Palos Verdes Peninsula/San Pedro 
          League of Women Voters, San Joaquin County 
          League of Women Voters, Santa Barbara 
          League of Women Voters, Santa Cruz County
          League of Women Voters, Southwest Santa Clara Valley 
          LifeLong Medical Care
          Los Angeles Free Clinic
          Lutheran Office of Public Policy - California
          Manteca Democratic Club 
          Mexican American Legal Defense and Educational Fund  
          Mendocino Coast Democratic Club 
          National Asian Pacific American Women's Forum
          National Association of Broadcast Employees and Technicians  

          National Association of Social Workers (NASW)
          National Association of Working Women
          Newsom & Fitzpatrick Medical Group, Inc. 
          Oak Grove Educators Association 
          Oakhurst Democratic Club 
          Oakland Education Association 
          Older Women's League of California 


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          Organization of SMUD Employees 
          Pacific Palisades Democratic Club 
          Planned Parenthood Affiliates of California 
          Planned Parenthood of Mar Monte
          Planned Parenthood of San Diego and Riverside Counties 
          Planned Parenthood of Shasta-Diablo
          Progressive Christians Uniting
          Rainbow Coalition - West Contra Costa 
          Richmond Greens Steering Committee 
          San Bernardino Public Employees 
          San Diego County Water Authority 
          San Francisco for California 
          San Francisco for Democracy 
          San Francisco Labor Council 
          San Jose - Evergreen Community College District 
          San Luis Obispo County Employees Association 
          San Mateo County Central Labor Council 
          Santa Rosa City Employees Association 
          Santa Clarita Valley $CV Clean Money for Better Government 
          Senior Advocacy Council 
          Service Employees International Union
          Service Employees International Union, United Healthcare  
          Sierra Friends Center
          Sober Living Network 

          South Bay Center
          South Hayward Parish 
          South of Market Project Area Committee 
          South Pasadena Activists
          Southern California Public Health Association 
          State of California Commission on the Status of Women 
          St. Mary's Center 
          Stockton Unified School District Resolution No. 06-77
          Strawberry Creek Lodge Tenant's Association 
          Sutter County Democratic Central Committee 
          Torrance Democratic Club 
          UE Western Regional Council - United Electrical, Radio and  
            Machine Workers of America 
          United Electrical, Radio and Machine Workers of America, UE  
          Local 1421
          United Food and Commercial Workers Union
          United Nations Association - USA & UNESCO Santa Barbara  
            County Chapters 


                                                                SB 840

          United Nurses Association of California/Union of Heath Care  
          United Methodist Women 
          Valley Interfaith Council, Board of Directors of San  
          Fernando Valley 
          Valley Women's Club 
          Wellstone Democratic Renewal Club 
          West LA Democratic Club 
          Western States Council 
          Women For Orange County 
          Women's Foundation 
          Women's International League for Peace and Freedom 
          Women Organized to Win

           OPPOSITION  :    (Verified  6/4/07)

          America's Health Insurance Plans 
          Association of California Life & Health Insurance Companies  

          Blue Cross of California 
          Blue Shield of California 
          California Association of Dental Plans 
          California Association of Health Plans 
          California's Benefits Specialists 
          California Chamber of Commerce 
          California Farm Bureau Federation 
          California Manufacturers & Technology Association 
          California Medical Association 
          California Resource Institute 
          Capitol Resource Institute 
          Health Net 
          Howard Jarvis Taxpayers Association 
          Insurance Brokers and Agents of the West 
          Kaiser Permanente 
          National Association of Insurance and Financial Advisors of  
          National Federation of Independent Business 
          Modesto Chamber of Commerce 
          United Chambers of Commerce of the San Fernando Valley

           ARGUMENTS IN SUPPORT  :    According to the author's office,  
          this bill provides fiscally sound, affordable health care  
          to all Californians, provide every Californian the right to  


                                                                SB 840

          choose his or her own physician, and control health cost  
          inflation.  The author's office 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's office 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's office states that overall, health care costs have  
          outpaced increases in wages by a ratio of 4:1 since 2000.

          The author's office 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's office 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's office 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's office find that 30 percent of  
          every health care dollar is wasted on administrative  
          overhead, alone.

          The author's office 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's office 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  


                                                                SB 840

          The author's office 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 this bill  
          is the gold-standard for health reform in California  
          because it offers truly universal health care since  
          eligibility is based on residency, not on employment or  
          income.  The author's office 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's office states that this bill 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.

           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  


                                                                SB 840

          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  
          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  
          Following is a detailed description of what the bill does  :  
          This bill establishes the California Universal Healthcare  
          System (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 establishes a new state agency, the California  
          Universal Healthcare Agency (CUHA), which will 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 will be comprised of the following  

          1.   The Universal Healthcare Policy Board
          2.   The Office of Patient Advocacy
          3.   The Office of Health Planning
          4.   The Office of Healthcare Quality
          5.   The Universal Healthcare Fund
          6.   The Public Advisory Committee
          7.   The Payments Board
          8.   Partnerships for Health


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           System Governance

           The bill provides for the appointment of a commissioner of  
          the CUHA by the Governor subject to confirmation by the  
          Senate.  The appointed commissioner will be the chief  
          officer of the agency and 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 requires 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 assigns 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 secure  
          electronic medical records, a referral system, and health  
          planning regions.  The commissioner will 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 requires 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, requires  
          the commissioner to promulgate conforming regulations.

          The bill also establishes 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 will include measures to  
          include public input.

          The bill establishes a Public Advisory Committee to advise  
          the Board on all matters related to the system.  Members of  
          the committee will be appointed by either the Governor, the  


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          Senate Committee on Rules or the Assembly Speaker, and will  
          represent a range of providers, including physicians,  
          nurses, hospitals, allied health professionals, clinics,  
          other providers, and  other stakeholders, including  
          consumers, labor and business.

          This bill creates the Office of Patient Advocacy within the  
          agency to represent the interests of health care consumers  
          relative to the system, as specified.

          This bill establishes the Office of Health Care Planning  
          and assigns 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 will 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  
          assigns 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 will 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.

          The bill establishes, 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 will 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  


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           The bill requires 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  
          requires 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, will be  
          established to advise the commissioner on all aspects of  
          implementation of the CUHA.

           Regional Planning

           This bill requires 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  

          The commissioner will 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 requires 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 will also  
          be required to assure the evaluation and measurement of  
          quality of care delivered in the region, and to perform  
          other specified duties.



                                                               SB 840

           The bill deems all California residents eligible for the  
          CUHS, and bases residency on physical presence in the state  
          with the intent to reside.  This bill also states  
          legislative intent for the system to provide health care  
          coverage to state residents who are temporarily out of the  

          The bill provides that visitors to the state who receive  
          care under the CUHS will be billed for all services  
          rendered.  Additionally, the bill deems 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 provides that individuals who arrive at a health  
          facility unable, because of physical or mental conditions,  
          to document eligibility shall be deemed eligible for  


           The bill provides that any eligible individual may receive  
          services under the system from any willing professional  
          health care provider.  Covered benefits will 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:

           1.Inpatient and outpatient health facility services.

           2.Inpatient and outpatient professional health care  
             provider services by licensed health care professionals.

           3.Diagnostic imaging, laboratory services, and other  
             diagnostic and evaluative services.

           4.Durable medical equipment including prosthetics,  
             eyeglasses, and hearing aids and their repair.

           5.Rehabilitative care.

           6.Emergency transportation and necessary transportation  
             for health care services for disabled indigent persons.

           7.Language interpretation and translation for health care  


                                                                SB 840


           8.Child and adult immunizations and preventive care.

           9.Health education.

          10.Hospice care.

          11.Home health care

          12.Prescription drugs listed on the formulary.

          13.Mental and behavioral health care.

          14.Dental care.

          15.Podiatric care.

          16.Chiropractic care.


          18.Blood and blood products.

          19.Emergency care products.

          20.Vision care.

          21.Adult day care.

          22.Case management and coordination to ensure services  
             necessary to enable a person to remain in the least  
             restrictive setting.

          23.Substance abuse treatment.

          24.Care of up to 100 days in a skilled nursing facility  
             following hospitalization.


          26.Benefits offered by a bona fide church, sect,  
             denomination, or organization whose principles include  
             healing entirely by prayer or spiritual means.


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          This bill allows 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 excludes specified services from coverage by the  
          CUHS health are 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 prohibits co-payments and deductibles  
          for preventive care or when prohibited by federal law.

          The bill requires 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  
          requires 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  
          provided 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 allows a  
          patient to appeal the denial of a referral through the  
          dispute resolution mechanism established by the  

           Budgeting and Financing Provisions

           The bill establishes the Universal Healthcare Fund (UHF)  
          within the State Treasury administered by a director  
          appointed by the commissioner.  The bill provides 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 requires the UHF director to establish a system  
          account and a reserve account.  The system account will be  
          required, at all times, to hold an amount estimated in the  


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          aggregate to provide for the payment for all losses and  
          claims for which the system may be liable.

          The bill requires 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 specifies 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 provides 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 provides that if the Budget Act has not been  
          enacted by June 30th of any year, all monies in the reserve  
          account of the Universal Healthcare Fund would be used to  
          implement the bill's provisions until funds became  
          available through the Budget Act.  The bill also requires  
          the State 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  

          The commissioner will 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 will 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  
          requires the commissioner to adjust the system budget so  
          that aggregate spending for the state would not exceed  


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          spending under this division by more than five percent.

          The bill requires 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 will 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 requires 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 also  
          requires the commissioner to establish formulas for  
          equitable contributions to CUHS from counties and other  
          local government agencies.

          The bill provides that the system be secondarily  
          responsible for providing care to the extent that the  
          federal, state, or county programs are not transferred to  
          the system.  Additionally, the bill requires 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 provides 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 will be required to  
          establish a Payments Board that is responsible for  
          negotiating reimbursements and establishing a uniform  


                                                                SB 840

          payments system for health care providers and managers not  
          part of health delivery systems, essential community  
          providers, and group medical practices.

          The bill also requires 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  

          The bill allows 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 requires provider compensation to be actuarially  
          sound and include a just and fair return for health care  
          providers.  The bill requires physicians to be reimbursed  
          for all services provided pursuant to the CUHA.  The bill  
          requires payment schedules that would 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 allows all licensed and accredited health care  
          providers in the state to participate in the CUHS, and  
          prohibits a provider from refusing to care for a patient  
          based on discrimination.  The bill also allows individuals  
          to select a primary care provider, and women to select an  
          obstetrician-gynecologist in addition to a primary care  

          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  


                                                                SB 840

          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 prohibits  
          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 will then evaluate whether to make an  
          adjustment in the operating budget.

          The bill provides 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 directs 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  
          specified criteria, to govern all capital investments and  
          acquisitions undertaken.  This bill requires 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 requires 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 requires the regional planning directors to  
          develop a regional capital development plan pursuant to the  


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          CUHS capital management plan established by the  
          commissioner.  The bill requires 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 requires 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 will 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 requires 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 will 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 establishes the California Universal Healthcare  
          Premium Commission, comprised of specified representatives  
          including health finance experts, business and labor  
          representatives, and state tax department 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 will 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 will 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 requires that the Premium Commission  
          be supported by a reasonable amount of staff time provided  


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          by the state agencies with membership on the commission.

          CTW:cm  6/4/07   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

                                ****  END  ****