BILL ANALYSIS Ó
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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
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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
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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
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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
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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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