BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 840|
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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,
Yee
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
CONTINUED
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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
premiums.
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
ballot.
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
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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
savings
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
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Alameda-Contra Costa Transit District
Alliance for Democracy - San Fernando Valley Chapter
Alliance of Retired Americans - West Side Chapter Los
Angeles
Altschuler Clinic - A Center for Weight Loss and Wellness
American Civil Liberties Union
American Civil Liberties Union
American Federation of State, County and Municipal
Employees
American Federation of State, County, and Municipal
Employees Retirees, Chapter 36
American Federation of Teachers California Federation of
Teachers
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
(CHIRLA)
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
Friends
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
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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
Representatives
Independent Employees of Merced County
Independent Living Center - San Gabriel Valley
Insure the Uninsured Project
Interfaith Council of Contra Costa County
JERICHO
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
(MALDEF)
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
Workers
Sierra Friends Center
Sober Living Network
Sourcingmag.com
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
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United Nurses Association of California/Union of Heath Care
Professionals
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
Cal-Tax
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
California
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
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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
equipment.
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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
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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
treatment.
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
entities:
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
system.
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Transition
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
characteristics.
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.
Eligibility
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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
state.
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
services.
Benefits
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
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services.
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.
17.Acupuncture.
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.
25.Dialysis.
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
commissioner.
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
exhausted.
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
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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
allocated.
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
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
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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
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