BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                   SB 810|
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                                 THIRD READING


          Bill No:  SB 810
          Author:   Leno (D), et al.
          Amended:  1/23/12
          Vote:     21

           
           SENATE HEALTH COMMITTEE  : 5-3, 05/04/11
          AYES: Hernandez, Alquist, De León, DeSaulnier, Wolk
          NOES: Strickland, Anderson, Blakeslee
          NO VOTE RECORDED: Rubio

           SENATE APPROPRIATIONS COMMITTEE  :  6-2, 1/19/12
          AYES:  Kehoe, Alquist, Lieu, Pavley, Price, Steinberg
          NOES:  Walters, Emmerson
          NO VOTE RECORDED:  Runner

           SENATE FLOOR  :  19-15, 1/26/12 (FAIL)
          AYES:  Alquist, Corbett, De León, DeSaulnier, Evans, 
            Hancock, Hernandez, Kehoe, Leno, Lieu, Liu, Lowenthal, 
            Negrete McLeod, Pavley, Price, Simitian, Steinberg, Wolk, 
            Yee
          NOES:  Anderson, Berryhill, Blakeslee, Calderon, Cannella, 
            Correa, Dutton, Emmerson, Fuller, Gaines, Harman, Huff, 
            La Malfa, Strickland, Walters
          NO VOTE RECORDED:  Padilla, Rubio, Runner, Vargas, Wright, 
            Wyland


           SUBJECT  :    Single-payer health care coverage

           SOURCE :     California Nurses Association/National Nurses 
          United
                      California School Employees Association, 
                                                           CONTINUED





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          AFL-CIO


           DIGEST  :    This bill creates the California Healthcare 
          System (CHS), a single-payer health care system, 
          administered by the California Healthcare Agency (CHA), to 
          provide health insurance coverage to all California 
          residents.  Provides that the CHS and CHA would become 
          operative when the Secretary of the California Health and 
          Human Services Agency determines that sufficient revenues 
          are available to implement the bill's provisions, or the 
          Secretary obtains a specified federal waiver, whichever is 
          later. 

           ANALYSIS  :    Health insurance and coverage in California is 
          currently provided by a web of public and private 
          providers.  Medi-Cal and the Healthy Families Program are 
          state and federally funded programs that provided coverage 
          to low-income aged, blind, and disabled, families, pregnant 
          women, and children.  The federal government administers 
          Medicare, a health insurance program available to Americans 
          aged 65 and over and other eligible individuals.  Private 
          insurance in the form of health care service plans or 
          insurance policies is generally paid for by employers and 
          enrollee premiums.  Additionally, there are public, 
          private, for-profit and non-profit clinics, hospitals, 
          laboratories, physicians, and other providers.

          The federal government enacted the Patient Protection and 
          Affordable Care Act (PPACA) which established an American 
          Health Benefit Exchange (Exchange) that makes qualified 
          health plans available to qualified individuals and 
          qualified employers.  If a state does not establish an 
          Exchange, the federal government administers the Exchange.  
          California established a state exchange.

           NOTE:  For a historical review of health insurance in 
                 California refer to pages 14-17 of this analysis.

          This bill:

          1. Establishes the CHS to provide health insurance coverage 
             to every California resident, as defined.  








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          2. Establishes a new state agency, the California 
             Healthcare Agency (CHA), which would oversee the CHS.  
             Provides for the appointment of a commissioner to the 
             CHA by the Governor, on or before July 1 of the fiscal 
             year following the operative date of the bill's 
             provisions, who would be subject to confirmation by the 
             Senate. 

          3. Prohibits the sale of any private health care service 
             plan or health insurance policy in the state, and makes 
             the CHS the primary payer for health care services in 
             California.   

          4. Requires the CHS and CHA to become operational no later 
             than two years after the Secretary of CHHS determines 
             that sufficient revenues are available to fund the costs 
             of implementing CHS and CHA, or the date the Secretary 
             receives a waiver under the PPACA to implement the CHS, 
             whichever is later.  

           System Governance
           
          5. Provides that the commissioner is the chief officer of 
             the CHA.  Provides that the commissioner has specified 
             duties, including to establish the CHS budget; set 
             goals, standards and priorities for the system; set 
             rates, fees and prices; establish a CHS enrollment 
             system; establish systems for electronic referral, 
             medical records, claims, and reimbursement; establish a 
             prescription drug and durable medical equipment 
             formulary; establish health planning regions; determine 
             the appropriate levels for a reserve fund for the 
             system; appoint specified officers and directors within 
             the system; implement specified cost control measures; 
             oversee measures to ensure quality of care; and, seek to 
             secure a repeal or waiver of any federal law provisions 
             that would preempt any part of the bill.

          6. Establishes the following entities under the CHA:

                   A Healthcare Policy Board, with specified 
                members, which would establish goals and priorities 
                for the system, the scope of services to be provided 
                to patients, and guidelines for evaluating the 







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                performance of the system, its officers, health 
                planning regions, and providers.  

                   A Public Advisory Committee, comprised of 
                physicians, nurses, hospitals, allied health 
                professionals, and clinics, consumers, labor, 
                business, and other stakeholders to advise the 
                Healthcare Policy Board on all matters related to the 
                system. 

                   An Office of Patient Advocacy, headed by a 
                patient advocate appointed by the commissioner, to 
                represent the interests of patients, and secure the 
                health care services and benefits to which they are 
                entitled.  The patient advocate would additionally be 
                required to establish and maintain a grievance 
                process and to develop educational and informational 
                guides for consumers to inform them of their rights 
                and benefits within the system.  

                   An Office of Health Planning to plan for the 
                short- and long-term health care needs of 
                Californians, pursuant to the health care and finance 
                standards set by the commissioner, by evaluating 
                regional budget requests and estimating the health 
                care workforce, health disparities, and 
                infrastructure needs.

                   An Office of Health Care Quality, headed by a 
                chief medical officer, who would support the 
                development of high quality, coordinated health care 
                services.  The bill assigns various duties to the 
                chief medical officer, including establishing 
                evidence-based standards of care and recommending to 
                the commissioner a benefits package based on clinical 
                efficacy.

                   Partnerships for Health which would improve 
                health through community health initiatives, support 
                the development of innovative means to improve care 
                quality, promote efficient, coordinated care 
                delivery, and conduct public education, as specified.

                   Up to 10 Health Planning Regions, for the 







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                purposes of local and community-based planning for 
                the delivery services.  

          7. Establishes, within the Office of the Attorney General, 
             the Office of the Inspector General for the CHS who 
             would be granted broad powers to conduct various 
             investigative activities, including the audit and review 
             of the financial and business records of individuals and 
             entities that provide services or products to the system 
             or are reimbursed by the system, and the investigation 
             of patterns of fraud and abuse related to the 
             utilization of medical products and services.

           Eligibility  

          8. Makes all California residents eligible for the CHS.  
             Residency would be based on physical presence in the 
             state with the intent to reside.  States legislative 
             intent for the system to provide health care coverage to 
             state residents who are temporarily out of the state.

          9. Provides that visitors to the state who receive care 
             under the CHS will be billed for all services rendered.  
             Deems individuals who are eligible for health benefits 
             from California employers but working in another 
             jurisdiction, to be eligible for benefits under the CHS, 
             as specified.  Provides that individuals who arrive at a 
             health facility unable to document eligibility, because 
             of physical and/or mental conditions, shall be deemed 
             eligible for services.  

           Benefits  

          10.Provides that any eligible individual may receive 
             services under the system from any willing professional 
             health care provider.  Covered benefits would be defined 
             under the bill to include all medical care determined to 
             be medically appropriate by the patient's health care 
             provider, including but not limited to:

                   Comprehensive medical benefits, including 
                inpatient and outpatient health facility services; 
                professional health care provider services by 
                licensed health care professionals; diagnostic and 







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                laboratory services, durable medical equipment, 
                rehabilitative care, emergency transportation and 
                necessary transportation for health care services for 
                disabled indigent persons; and preventive care;
                   Health education;
                   Hospice care;
                   Home health care;
                   Prescription drugs listed on the formulary;
                   Mental and behavioral health care;
                   Dental care;
                   Podiatric care, chiropractic care, and 
                acupuncture;
                   Vision care;
                   Adult day care;
                   Case management and coordination to ensure 
                services necessary to enable a person to remain in 
                the least restrictive setting;
                   Substance abuse treatment;
                   Skilled nursing facility care up to 100 days per 
                year, following hospitalization;
                   Family planning services and supplies;
                   Early and periodic screening, diagnosis, and 
                treatment services for individuals under 21 years of 
                age; and
                   Specified faith healing services.

          11.Allows the commissioner to expand benefits when 
             expansion meets the intent of the statute and can be 
             sufficiently funded.  

          12.Excludes specified services from coverage, including 
             health care services that are determined to have no 
             medical indication, services rendered primarily for 
             cosmetic purposes, private rooms in inpatient health 
             facilities, and the services of a provider or facility 
             that is not licensed by the state.  

          13.Prohibits co-payments and deductibles for preventive 
             care in cases where they are prohibited by federal law, 
             but allows co-payments and deductibles for other 
             services, commencing in the third year of CHS operation, 
             as specified.  Requires the commissioner to establish a 
             process to waive co-payments or deductibles for those 
             who lack the financial means to pay them.







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          14.Allows eligible beneficiaries to choose a primary care 
             provider, and authorizes women to choose an 
             obstetrician-gynecologist in addition to a primary care 
             provider.  

          15.Requires individuals enrolling in integrated health care 
             systems to retain membership for at least one year after 
             an initial three-month evaluation period, as specified.  


          16.Requires patients to have a referral from a primary care 
             provider to see a specialist, except for a dentist, 
             optometrist, or ophthalmologist, as specified.  Also 
             allows a specialist to serve as the primary care 
             provider if the provider agrees to coordinate the 
             patient's care.

           Budgeting and Financing Provisions
           
          17.Establishes the Healthcare Fund (Fund) within the State 
             Treasury, administered by a director appointed by the 
             commissioner, to receive funds to support CHS costs.  

          18.Requires the Fund director to establish a system account 
             and a reserve account, as specified. 

          19.Requires the Fund 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.  

          20.Specifies the types of cost control measures the 
             commissioner can implement, including changes in 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 others as specified.








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          21.Specifies cost control measures that may be followed, if 
             the commissioner or regional planning director 
             determines that regional revenue and expenditure trends 
             indicate a need for regional cost containment.  

          22.Provides that, in any year in which the Budget Act has 
             not been enacted by June 30th, moneys in the reserve 
             account of the Fund shall be used to implement the 
             bill's provisions until funds became available through 
             the Budget Act.  Requires the State Controller to make 
             General Fund loans to the Fund if the reserve funds are 
             exhausted. 

          23.Requires the commissioner to establish a budget for all 
             expenditures that includes a limit on total annual state 
             expenditures and establishes regional allocations to 
             cover a three-year period.  

          24.Requires the commissioner to limit the growth of 
             spending under CHS to the average growth in state 
             domestic product, population growth, advances in 
             technology, and other factors.  Additionally requires 
             the commissioner to adjust the system budget so that 
             aggregate health care spending in the state does not 
             exceed CHS spending by more than five percent.  

          25.Requires the commissioner 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.  

          26.Requires the commissioner to establish a budget to 
             support research and innovation and 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.

          27.Requires the commissioner to project the system's 
             revenues and expenditures pursuant to specified factors, 
             and to establish specified budgets for various 
             components of the health care system that include 
             adjustments for cost-of-living differences between 
             regions, health risk of enrollees, workforce development 
             needs, and projected savings due to improved access and 







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             efficiency of care delivery, and other variables.

          28.Requires the commissioner to seek necessary approval so 
             that all current federal payments for health care are 
             paid directly to CHS, which would then assume 
             responsibility for the benefits and services paid by the 
             federal government with those funds.  

          29.Requires the commissioner to establish formulas for 
             equitable contributions to CHS from counties and other 
             local government agencies.

          30.Provides that the system is secondarily responsible for 
             providing care, to the extent that the federal, state, 
             or county programs are not transferred to the system.  

          31.Requires the CHS to cover the Medi-Cal share of cost 
             amounts for aged, blind and disabled beneficiaries, and 
             Medicare Part B premiums, to the extent that the 
             commissioner obtains authorization to incorporate 
             Medi-Cal and Medicare revenues into the Fund.  

          32.Provides that until a single payer system for all health 
             care in the state is established, health care costs may 
             continue to 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.

          33.Establishes a transition advisory group, comprised of 
             the officers of the system, specified stakeholders and 
             health care policy experts, and representatives from 
             existing state departments and agencies to advise the 
             commissioner on all aspects of implementation of the 
             CHA.  

           Health Care Providers
           
          34.Allows all licensed and accredited health care providers 
             in the state to participate in the CHS.

          35.Requires the commissioner to establish a Payments Board 
             that would be responsible for negotiating reimbursements 
             and establishing a uniform payments system for 







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             fee-for-service providers, essential community 
             providers, group medical practices, and upper level 
             managers, as specified.

          36.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.  Prohibits providers who accept any payment 
             from CHS from billing a patient for any covered service. 
              

          37.Requires provider compensation to be actuarially sound 
             and include a just and fair return for health care 
             providers.  Requires payment schedules to include bonus 
             payments associated with specified performance standards 
             and goals, including service to medically underserved 
             areas.  

          38.Requires integrated health delivery systems, essential 
             community providers, and group medical practices to 
             negotiate operating budgets with regional planning 
             directors that allow them 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.    

          39.Provides that margins generated under a health care 
             system's operating budget may be retained and used to 
             meet the health care needs of the population, 
             conditioned upon specified restrictions.  

          40.Provides that all claims for health care services 
             rendered pursuant to the system shall be submitted to 
             the Fund via an electronic claims and payment system.

           Health Facilities and Equipment
           
          41.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.  








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          42.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.

          43.Requires the establishment of a competitive bidding 
             process, as described, for the development of capital 
             management plans that meet the needs of the system; 
             provides that the system may fund, partially fund, or 
             participate in seeking funding for those capital 
             projects.  

          44.Requires the regional planning directors to develop 
             regional capital development plans and to make financial 
             information available to the public when the system's 
             contribution to a capital project is greater than $25 
             million.

           Health Care Premiums
           
          45.Establishes the California 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, 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.  

          46.Requires the Premium Commission to be funded through an 
             appropriation in the Budget Act of 2013, and authorizes 
             it to obtain grants from, and contracts with, 
             individuals and entities, and receive charitable 
             contributions or any other lawful source of income in 
             order to perform its functions.  

          47.Requires the Premium Commission, on or before January 1, 
             2014, to submit a recommendation for a premium structure 
                                                                                   to the Governor and the Legislature.

           Background  







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           Analyses of Prior Single-Payer Proposals
           
          California-specific analyses were completed of SB 921 
          (Kuehl), 2003-04 Session, and SB 840 (Kuehl), 2007-08 
          Session, both of which were previous single-payer proposals 
          containing provisions nearly identical to those in this 
          bill, as well as of SB 1014 (Kuehl), a companion to SB 840, 
          which would have imposed taxes on employer payroll, 
          employee wages, and other self-employed or non-wage income, 
          in order to generate revenues to help fund the proposed 
          single-payer system.  These analyses were written prior to 
          the passage of federal health care reform.

          The Legislative Analyst's Office (LAO) report analyzed SB 
          840 and its funding mechanism SB 1014 (Kuehl), 2007-08 
          Session, which would have imposed a combined 12 percent tax 
          on employers and employees, as well as other unspecified 
          taxes (the LAO estimated a rate of 11.5 percent) for the 
          purposes of providing a funding source for SB 840, as a 
          comprehensive "single-payer proposal" and assumed an 
          implementation date of January 1, 2011.  The LAO estimated 
          annual costs of $210 billion in the first year of 
          implementation, which would grow over subsequent years to 
          $250 billion in 2015-16.  The analysis predicted a net 
          shortfall of $42 billion in the 2011-12 fiscal year, the 
          first full year of implementation, and $46 billion in 
          2015-16, due to a faster rate of growth for health benefits 
          costs relative to SB 1014 revenues.  The LAO estimated that 
          it would take a combined tax of 16 percent on employers and 
          employees and 15.5 percent on the other taxes to mitigate 
          the predicted shortfall in revenues.  The LAO estimate did 
          not include the 1 percent tax in SB 1014.  The LAO assumes 
          that the state would realize savings due to reduced 
          physician and hospital administration costs and that the 
          system would be able to operate at relatively low 
          administration costs.  The analysis also assumes that 
          federal, state, retired state employee health 
          contributions, and local government contributions would 
          shift to the single-payer system.

          The Lewin Group's analysis of SB 921 estimated costs would 
          be $167 billion in 2006 and would increase to $280 billion 
          in 2015.  The group assumed similar tax revenues to those 







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          later proposed in SB 1014 in 2007.
          Both the Lewin and LAO reports cited potential 
          administrative savings under a single-payer system, but 
          their estimates differed:  the Lewin report estimated 
          administrative costs of 1.9 percent of health benefit 
          costs, a rate that is similar to that of the Medicare 
          program, versus a rate of 12.7 percent for private insurer 
          administration.  The LAO report estimates system 
          administrative costs of 3.9 percent in the first year of 
          implementation and 2.9 percent after five years.  This bill 
          requires that system administrative costs not exceed 10 
          percent of system costs in the first five years of 
          transition and would limit them to five percent of system 
          costs within 10 years of completing transition to the 
          system.  This bill also requires the Commissioner to 
          establish a budget to support the training, development, 
          and continuing education of health care providers needed to 
          meet the needs of the population and the goals and 
          standards of the system.

           PPACA and State Waivers
           
          The PPACA gives states the flexibility to apply for waivers 
          of certain provisions of the PPACA in order to pursue 
          alternative strategies for providing their residents with 
          affordable, comprehensive health coverage.  Under the law, 
          these waivers are available beginning in 2017.  Under these 
          waivers, states may implement policies that differ from 
          those in the PPACA so long as they:

          1. Provide coverage that is at least as comprehensive as 
             the coverage offered through the Exchanges;

          2. Make coverage at least as affordable as it would have 
             been through the Exchanges;

          3. Provide coverage to at least as many residents as 
             otherwise would have been covered under the PPACA; and

          4. Do not increase the federal deficit.

          Particular provisions of PPACA that states are able to 
          waive include establishment of an Exchange, certain 
          provisions related to qualified health plans, and the 







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          provision of premium tax credits and cost sharing 
          subsidies.

          The year 2017 was established in the PPACA for the waivers 
          to allow for three years of experience under the PPACA, 
          which will enable the federal government to determine how 
          much a state is eligible to receive in federal funding 
          under the waiver. 

          In March 2011, the Departments of Treasury and Health and 
          Human Services issued regulations outlining the procedural 
          requirements states must follow in seeking and implementing 
          state flexibility waivers.
                    History of Health Insurance in California
                                         
          The idea of establishing a state run health insurance 
          program started with SCA 26 (Kehoe) in 1917.  It would have 
          established a health insurance system applicable to 
          persons, and their dependents, whose income it was deemed 
          insufficient to meet hazards of sickness and disability.  
          Support for such a system would have been through 
          contributions, voluntary or compulsory, from such persons, 
          employers and by state appropriation.  It would have 
          provided implementation of the program by a commission or 
          court created by the Legislature.  The purpose of the 
          amendment was to give health insurance the same status 
          which workers' compensation had constitutionally.  It 
          appeared on the 1918 ballot as Proposition 20 and failed by 
          a vote of 133,858 to 358,324.

          It was not until the 1930s that the idea of health 
          insurance, paying a fee to guard against a major personal 
          catastrophe, came to the forefront.  The Los Angeles County 
          Medical Association reached an agreement with the 
          Metropolitan Water District to provide health care for its 
          employees in 1930.  In 1937, the Alameda County Medical 
          Association developed one of the first plans in order to 
          prevent the closure of hospitals when people were unable to 
          pay their bills.  Participating employers and their 
          employees set aside a small amount each month to guard 
          against the day when hospitalization might be necessary.  
          In 1937, Henry J. Kaiser hired physicians to provide 
          medical care for workers and families and has reorganized 
          into a separate corporate structure, Kaiser Permanente, 







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          which now offers health plans to both the private and 
          public sectors.

          On the legislative front, SB 454 (Dan E. Williams) of 1935 
          would have provided universal health care for all 
          Californians. However, it died in a Senate policy 
          committee.  In 1937, AB 1132 (Cronin) was chaptered into 
          law, providing for a public nonprofit hospital services 
          plan, and creating a public corporation with a statutorily 
          defined board of directors and mission, but which had the 
          flexibility of a private organization.  That same year, AB 
          1283 (Welsh) was introduced which would have authorized the 
          California Medical Association to create its own voluntary 
          health prepayment plan in each county.  It failed passage 
          on the Assembly Floor, was given reconsideration, and died 
          at the end of the session.

          In 1939, the California Medical Association voted to form a 
          nonprofit membership corporation, which later became Blue 
          Shield.  It offered prepaid monthly membership to patients 
          who would receive care from member physicians.  Patients 
          received medical coverage for $2.50 a month, not including 
          hospitalization.  The California Medical Association 
          indicates approximately 20,000 patients signed up in 1940.

          In 1945, Governor Earl Warren proposed a statewide health 
          insurance plan, 
          SB 500 (Salsman) and AB 800 (Wollenberg), by creating a 
          payroll-tax-funded single payer plan.  SB 500 died in the 
          Senate Government Efficiency Committee, and AB 800 died in 
          the Assembly Health Committee after a motion to withdraw 
          from committee failed 39-38.  A competing plan, AB 449 
          (Vincent Thomas) also died in the Assembly Health Committee 
          after a motion to withdraw failed in 1949. President Truman 
          failed to get a nationwide universal health care proposal 
          off the ground.  By the late 1940s, employers began to 
          offer health insurance as a "non cash" benefit to compete 
          for employees.

          In 1965, as political pressure mounted for some form of 
          universal coverage, President Lyndon Johnson was able to 
          have Congress pass Medi-care and Medicaid assuring 
          comprehensive health coverage to approximately 20% of the 
          people.  In California, the Legislature enacted, and 







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          Governor Edmund G. "Pat" Brown signed into law the state's 
          equivalent health plan which is now known as Medi-Cal.

          By 1970, with the expansion of coverage and the demand for 
          health care increasing, the costs of health care were 
          growing at a rate faster than the cost-of-living.  In order 
          to control these costs, the idea of utilization control was 
          born and thus began the health maintenance organizations, 
          or what is known as HMOs.

          In 1971, the first set of Medi-Cal reforms were enacted 
          under AB 949 (Campbell) which encouraged enrollment in 
          prepaid health programs by reducing fee-for-service 
          utilization (reduced reimbursement, prior authorization, 
          and visit limitation).  However, the program ran into major 
          fraud problems.  To solve these problems, the Knox-Keene 
          Act of 1976 was enacted establishing the regulatory 
          framework for licensing and regulating HMOs.  Returning to 
          the national level, the Nixon Administration, in 1971, 
          proposed universal coverage through a mix of public and 
          private reforms without success.

          In the 1980s and 1990s, health insurance premiums continued 
          to rise and many American families found themselves 
          uninsured.  In 1993, President Clinton pushed 
          unsuccessfully for a federal universal coverage plan.

          In the 1990s, initiatives concerning health insurance were 
          placed on the California ballot - Proposition 166 of 1992 
          and Proposition 186 and 214 of 1996 - and were rejected by 
          the voters.  In 1997, the Health Farmworker Program was 
          created which is low cost insurance that provides health, 
          dental and vision coverage to children who do not have 
          insurance today and do not qualify for no-cost Medi-Cal. 

          In 2003, the Legislature successfully passed and Governor 
          Gray Davis signed 
          SB 2 (Speier) which enacted the Health Insurance Act of 
          2003 that would have provided coverage for approximately 
          one million people through a so-called "pay or play" 
          system.  Under that system, specified California employers 
          would be required to pay a fee to the state to provide 
          health insurance (in other words, "pay") for their 
          employees, and in some cases, for their dependents.  







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          Alternatively, the employer could choose to arrange 
          directly with the health insurance providers for coverage 
          (in other words, "play") for these individuals.  Employers 
          choosing to arrange their own health coverage would receive 
          a credit that would fully offset their fee.  In order to 
          qualify for the fee offset, the employer would have to 
          provide specified types of coverage.  This law was placed 
          on hold when the measure was put on the November 2004 
          ballot by referendum and the voters rejected SB 2 going 
          into effect.

          Another approach to health care reform, in 2003, came from 
          Senator Sheila Kuehl called the "single-payer" in which the 
          payment for doctors, hospitals and other providers for 
          health care form a single fund.  The Canadian health care 
          system is an example of a single-payer system.  Under 
          single-payer, a doctor's practice and hospitals may remain 
          private and negotiate for payments with the government. The 
          plan is designed to insure every Californian with 
          comprehensive health care coverage; guarantee the right to 
          choose their own doctors; control the cost of health care; 
          lower the cost of prescription drugs; and preserve the 
          private competitive character of medical care provision.  
          It provides comprehensive medical, dental, vision, 
          hospitalization and prescription drug coverage to every 
          California resident.  This broad coverage is made possible 
          through a streamlined claims and reimbursement system.  It 
          requires California to use its purchasing power to 
          negotiate bulk rates for prescription drugs and durable 
          medical equipment, such as wheelchairs.  It preserves the 
          status of health care providers, hospitals and pharmacies 
          as private, competitive businesses.  The plan is funded by 
          drawing in current public spending and replacing all 
          premiums, co-payments and deductibles paid to insurance 
          companies with one affordable premium based on income.  
          Senator Kuehl's SB 840, of 2005-06, was vetoed by the 
          Governor.

          A similar bill, SB 810 (Leno) died on the Assembly Floor.  
          In 2009-10, it passed the Senate (22-14) as follows:  

             AYES:  Calderon, Cedillo, Corbett, DeSaulnier, Ducheny, 
               Florez, Hancock, Kehoe, Leno, Liu, Lowenthal, Negrete 
               McLeod, Oropeza, Padilla, Pavley, Price, Romero, 







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               Simitian, Steinberg, Wiggins, Wolk, Yee
             NOES:  Aanestad, Ashburn, Cogdill, Correa, Cox, Denham, 
               Dutton, Harman, Hollingsworth, Maldonado, Runner, 
               Strickland, Walters, Wyland
             NO VOTE RECORDED:  Alquist, Huff, Wright

          As mentioned before, the Governor vetoed the major health 
          bill, in 2007, that was able to make it through the 
          legislative process - AB 8 (Speaker Nunez and Senate Pro 
          Tempore Perata).  AB 8 sought to improve access to the 
          individual insurance market by standardizing medical 
          underwriting and enhancing coverage and eligibility for 
          high risk individuals; sought to improve access to private 
          insurance through major insurance market reforms; expand 
          eligibility for public health programs for children and 
          their parents; and impose cost containment measures such as 
          required preventive services, evidence based care, and 
          administrative expenditure caps.  It would have created a 
          statewide purchasing pool - the California Cooperative 
          Health Insurance Purchasing Program.  It would have 
          required employers to elect to spend at least 7.5% of 
          Social Security payroll on health care expenditures, or pay 
          an equivalent fee to a trust fund, and required employees 
          to accept the employer's health expenditures, or enroll in 
          coverage through the purchasing pool.

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

          According to the Senate Appropriations Committee:

                         Fiscal Impact (in thousands)

            Major Provisions      2012-13     2013-14     2014-15     Fund  

           Premium Commission            Hundreds of thousands to 
           millions            General
           operations          per year

           Implementation costs          Annual costs of $200-$250 
           billion             General

           SUPPORT  :   (Verified  1/25/12)








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          California Nurses Association/National Nurses United 
          (co-source)
          California School Employees Association, AFL-CIO 
          (co-source)
          ACLU of Southern California
          Actor's Equity Association
          AFSCME Retirees Chapter 36
          Alameda County Board of Supervisors
          American Association of University Women - Davis
          American Federation of State, County, and Municipal 
          Employees
          Bagg Lady Handbags
          Berkeley City Council
          Berkeley-East Bay Gray Panthers
          Board of Supervisor of the County of Santa Clara
          California Alliance for Retired Americans
          California Church IMPACT
          California Commission on the Status of Women
          California Communities United Institute
          California Federation of Teachers
          California Health Professional Student Alliance
          California Labor Federation
          California Newsreel
          California Pan-Ethnic Health Network
          California State Pipe Trades Council
          California Teachers Association
          Californians for Disability Rights
          City of San Pablo City Council
          City of Santa Monica
          Communications Workers of America, District 9
          Congress of California Seniors
          Consumer Federation of California
          County Health Executives Association of California (if 
          amended)
          Democratic Alliance for Action
          Democratic Club at The Villages
          Democratic Club of Santa Maria Valley
          Democratic Party of Contra Costa County
          East Bay Peace Action
          El Cerrito Democratic Club
          Friends Committee on Legislation of California
          Grandfolia
          Gray Panthers Sacramento
          Greater Santa Cruz Federation of Teachers







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          Having Our Say
          Health Access California
          Health Care for All - Contra Costa
          Health Care for All - Los Angeles
          Health Care for All - Nevada County Chapter
          Health Care for All - Sacramento Valley
          Health Care for All - San Francisco Mid-Peninsula Chapter
          Health Care for All - Santa Barbara County Chapter
          Health Care for All - Yolo Chapter
          Health Officers Association of California
          Interfaith Council of Contra Costa County
          International Longshoremen's & Warehousemen's Union, Local 
          6
          JERICHO: A Voice for Justice
          Kehilla Community Synagogue
          Kramer Translation
          Labor United for Universal Healthcare
          Laurel Park Neighborhood Council
          League of Women Voters - Los Altos-Mountain View Area
          League of Women Voters - Pasadena Area
          League of Women Voters of Davis
          League of Women Voters of Los Angeles
          League of Women Voters of San Francisco
          League of Women Voters of San Joaquin County
          League of Women Voters of San Jose/Santa Clara
          League of Women Voters of Santa Barbara
          League of Women Voters of the Livermore-Amador Valley
          League of Women Voters of the Livermore-Amador Valley
          League of Women Voters West Contra Costa County
          Los Angeles Unified School District
          Lumina Media Production
          National Alliance on Mental Illness, California
          National Association of Social Workers - California Chapter
          Northern California Committees for Correspondence for 
            Democracy and Socialism
          Old Lesbians Organizing for Change
          Older Women's League of California
          Orange County Nation Group
          Pacific Palisades Democratic Club
          Parents For Independence, Inc.
          Peace and Justice Network of San Joaquin County
          Peninsula Democratic Coalition
          Physicians for a National Health Program
          Progressive Democrats of America - San Francisco







                                                                SB 810
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          Random Technologies Corp.
          Retired Public Employees Association
          Richmond Commission on Aging
          Richmond Vision
          San Francisco Psychological Association
          San Gabriel Valley Democratic Women's Club
          San José /Evergreen Faculty Association
          San Mateo County Democracy for America
          Santa Barbara Chapter of the ACLU of Southern California
          Santa Clara County Democratic Club
          Santa Clarita Valley Fair Elections Committee
          Service Employees International Union Local 1021
          Single Payer San Joaquin
          St. John's Well Child and Family Centers
          The Federation of Retired Union Members of Santa Clara 
          County
          The Unitarian Society of Santa Barbara
          Town of Fairfax
          Unitarian Universalist Church of Santa Clarita
          Unitarian Universalist Legislative Ministry Action 
          Network-CA
          UNITE HERE Local 2
          United Methodist Women - California Nevada Conference
          United Nurses Associations of California/Union of Health 
            Care Professionals
          Warehouse Union Local 16, ILWU
          West Contra Costa Unified School District
          Westchester Democratic Club
          Western Center on Law and Poverty
          Westside Progressives
          Wheelhouse
          Willoughby Farms
          Women's International League for Peace and Freedom, 
          Peninsula Beach
          Woodland League of Women Voters

           OPPOSITION  :    (Verified  1/23/12)

          America's Health Insurance Plans
          Anthem Blue Cross
          California Association of Health Plans
          California Association of Health Underwriters
          California Association of Joint Powers Authorities
          California Chamber of Commerce







                                                                SB 810
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          California Farm Bureau Federation
          California Medical Association
          California Taxpayers Association
          CSAC Excess Insurance Authority
          Health Net
          Howard Jarvis Taxpayers Association
          National Association of Insurance and Financial Advisors of 
          California                                             
          USCB, Inc.

           ARGUMENTS IN SUPPORT  :    The California Nurses Association/ 
          National Nurses United (CNA/NNU), the bill's co-sponsors, 
          and other supporters of the bill say this bill will greatly 
          improve on the weaknesses of the current health care system 
          and of the recently enacted federal health care reforms, 
          for several reasons.  Specifically, CNA/NNU and other 
          supporters of this bill argue that the bill will free up 
          billions in waste duplication, and administrative costs, 
          and produce billions of dollars of savings annually by 
          allowing for bulk purchasing of prescription drugs and 
          medical equipment, and it will provide better access to 
          preventive and primary care, thereby reducing the costs of 
          treatable illnesses.  CNA/NNU states that the changes made 
          by federal health care reform have made some improvements 
                  in the health care system, but they are not enough.  In 
          particular, federal health care reform omitted important 
          features, such as a public option and insurance rate 
          regulation to control health care costs.  Without these two 
          critically important provisions, health care inflation will 
          continue to climb.  CNA/NNU further argues that because 
          federal health care reform includes an individual mandate, 
          it is imperative for California to take action to make sure 
          health care benefits are affordable, comprehensive, and 
          available to everyone.  Health Access California (HAC) 
          states that this bill combines universal coverage with the 
          most effective cost control mechanisms known to exist, 
          including global budgets for health services and the 
          elimination of waste and administrative overhead created by 
          the insurance based model of coverage.  HAC argues that 
          insurance is not a sensible means of financing health care 
          because it assumes that health care is expensive and 
          infrequently used; instead health care is routine, 
          frequently needed, and often most needed by those least 
          able to pay.  Spreading these costs across society through 







                                                                SB 810
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          23

          public financing makes sense because health care is like 
          education, water, or transportation--a basic service needed 
          by all.
           
          The Western Center on Law Poverty states that this bill 
          would achieve many health care improvements for low-income 
          consumers, including that all resident would have 
          comprehensive coverage, low-income persons would no longer 
          receive care through separate health programs, that the 
          system would utilized a simplified eligibility processes, 
          that medical debt and related bankruptcy would be 
          eliminated, and that all Californians would have access to 
          preventive medical and dental care.  The National Alliance 
          on Mental Illness (NAMI) states that this bill will 
          dramatically increase patient choice and provider 
          competition by guaranteeing every Californian total choice 
          over his/her doctors and hospitals instead of the narrow 
          provider networks that restrict choice today.  NAMI argues 
          that this bill would also significantly lower health 
          premiums for businesses and families, and further argues 
          that single-payer is the only model that will achieve true 
          universal coverage.
           
           ARGUMENTS IN OPPOSITION  :    America's Health Insurance 
          Plans (AHIP) states that while seemingly attractive in 
          principle, single-payer health care systems are riddled 
          with significant unintended consequences that impact 
          consumers.  AHIP questions whether there is public support 
          for a government-run health care system and argues that 
          this bill directly contradicts the efforts of Congress in 
          enacting the federal health care reforms, which rely on 
          market-based reforms to protect consumers and improve 
          access to health care.  AHIP states that single-payer 
          health care systems are expensive and that significant new 
          taxes will be needed to fill the financial gap left by the 
          elimination of health care premiums, as found by the LAO in 
          its 2008 report.  AHIP further argues that while proponents 
          of single-payer argue that individuals have greater access 
          to health care services, the evidence suggests that 
          consumers in countries with single-payer systems experience 
          increased wait times for physician and specialist visits, 
          elective surgeries, and lifesaving procedures, which can 
          have a direct effect on the quality of care.  AHIP cites a 
          2008 Commonwealth Fund report on patients with chronic 







                                                                SB 810
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          24

          conditions, which found that wait times were longest in 
          Canada, New Zealand, and the United Kingdom, where at least 
          one-third of adults reported wait times of two months or 
          longer to see a specialist.  
           The California Association of Health Plans (CAHP) argues 
          that it is counterproductive to consider a single payer 
          health care system when the state is in the midst of 
          implementing the current federal health care reforms.  CAHP 
          also disagrees with proponents' assumption that 
          administrative costs will reduced significantly under the 
          bill and that the numerous governmental entities created 
          under this bill that would assume responsibility for 
          organizing and delivering care, including claims payment, 
          utilization review, disease management, development of drug 
          formularies, and customer service functions, would incur 
          the same types of costs.  

          The California Association of Health Underwriters states 
          that under this bill, consumers will lose the ability to 
          use health insurance agents to intervene on their behalf 
          when they are denied benefits.  The National Association of 
          Insurance and Financial Advisors of California states that 
          the coverage under this bill would be determined by what 
          government feels it can afford, not by what consumers may 
          want or need.  The California Chamber of Commerce states 
          that the single payer system proposed in this bill would be 
          funded through premiums set by an appointed commission and 
          paid by all employers.  To balance the budget for the 
          system, premiums could be increased, and benefits and 
          provider payments reduced, and copayments and deductibles 
          imposed.  Further added tax burdens on individuals and 
          employers will only lead to declining revenues and job 
          losses without addressing escalating medical costs.  The 
          California Taxpayers Association (Cal Tax) writes that the 
          higher payroll taxes for employers and employees that would 
          be needed to adequately fund a single payer system would 
          discourage business growth, hurt investments, and chase 
          jobs away from the state.


          CTW:mw  1/26/12   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE








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                                ****  END  ****