BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K. Alquist, Chair
BILL NO: SCA 29
S
AUTHOR: Strickland
C
AMENDED: As Introduced
A
HEARING DATE: May 5, 2010
REFERRAL: Elections, Reapportionment and
Constitutional 2
Amendments Committee
9
CONSULTANT:
Bain
SUBJECT
Health care coverage
SUMMARY
Amends the state Constitution to require voter approval of
a state or federal program that: (a) requires individuals
to obtain health care coverage; (b) requires a health plan
or health insurers to guarantee issue to all applicants;
(c) requires employers to either provide health care
coverage to their employees or pay a fee or tax to the
state or the federal government in lieu of providing that
coverage; (d) that allows an entity created, operated, or
subsidized by the state or federal government to compete
with health plans and health insurers in the private
sector; and, (e) creates a single-payer health care system.
CHANGES TO EXISTING LAW
Existing state law:
Existing law does not provide a system of health care
coverage for all California residents. Existing law does
not require employers to provide health care coverage for
employees and dependents, other than coverage provided as
part of the workers' compensation system for work-related
employee injuries. Existing law does not require
Continued---
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individuals to maintain health care coverage. Existing law
establishes various programs to provide health care
coverage to individuals, including individuals who have
limited incomes and meet various eligibility requirements.
Existing state law, through the California Constitution,
grants the electors the referendum power, which is the
power to approve or reject statutes or parts of statutes,
except urgency statutes, statutes calling elections, and
statutes providing for tax levies or appropriations for the
usual current expenses of the state. A referendum measure
may be proposed by presenting to the Secretary of State,
within 90 days after the enactment date of the statute, a
petition certified to have been signed by electors equal in
number to five percent of the votes for all candidates for
Governor at the last gubernatorial election, asking that
the statute or part of it be submitted to the electors.
Existing federal law:
The United States Constitution, through the "Supremacy
Clause," states that the Constitution, and the laws of the
United States made pursuant to the Constitution, are the
supreme law of the land, and judges in every state must be
bound to those laws, notwithstanding anything in state
constitutions or state laws to the contrary.
Existing federal law, enacted through the Patient
Protection and Affordable Care Act, (P.L. 111-148), known
as "PPACA" and the Health Care and Education Affordability
Reconciliation Act of 2010, (P.L. 111-152) contains the
following major provisions which would be affected by this
amendment:
Requires health plans in a state to accept every employer
and individual in the state that applies for coverage.
This requirement is known as "guarantee issue." Allows
health plans to restrict enrollment in coverage to open
or special enrollment periods. Requires the Secretary of
the Department of Health and Human Services (DHHS
Secretary) to promulgate regulations with respect to
enrollment periods.
Requires individuals to maintain minimal essential health
care coverage beginning in 2014. This requirement is
known as the "individual mandate." Imposes a penalty for
STAFF ANALYSIS OF SENATE CONSTITUTIONAL AMENDMENT 29 Page
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failure to maintain such coverage beginning in 2014,
except for certain low-income individuals, individuals
who cannot afford coverage, members of Indian tribes, and
individuals who suffer hardship. Exempts from the
coverage requirement individuals who object to health
care coverage on religious grounds, individuals not
lawfully present in the United States, and individuals
who are incarcerated.
Assesses employers with 50 or more employees that do not
offer coverage to its full-time employees and their
dependents and have at least one full-time employee who
receives a health insurance premium tax credit or
cost-sharing reduction, an assessable payment amount of
$2,000 per year per full-time employee, excluding the
first 30 employees from the assessment. Assesses
employers with 50 or more employees that offer coverage,
but have at least one full-time employee receiving a
health insurance premium tax credit or cost-sharing
reduction a different assessable payment amount,
excluding the first 30 employees from the assessment.
This type of requirement is commonly referred to as "pay
or play."
Requires the DHHS Secretary to establish the Consumer
Operated and Oriented Plan (CO-OP) program to foster the
creation of qualified nonprofit health insurance issuers,
to offer qualified health plans in the individual and
small group markets. Requires the DHHS Secretary to
provide for loans and grants to persons applying to
become qualified nonprofit health insurance issuers.
Sets forth provisions governing the establishment and
operation of CO-OP program plans.
Requires the Director of the Office of Personnel
Management (OPM) to: (1) enter into contracts with health
insurance issuers to offer at least two multi-state
qualified health plans (one of which is a non-profit
entity) through each Exchange in each state, to provide
individual or group coverage; and, (2) implement this
provision in a manner similar to the manner in which the
Director implements the Federal Employees Health Benefits
Program. Sets forth requirements for a multi-state
qualified health plan.
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Requires the Secretary of DHHS to establish a community
health insurance option to offer, through the Exchanges,
health care coverage that provides value, choice,
competition, and stability of affordable, high quality
coverage throughout the United States. Requires the
Secretary to establish geographically adjusted premium
rates in an amount sufficient to cover expected costs
(including claims and administrative costs) using methods
in general use by qualified health plans. Requires the
Secretary to negotiate reimbursement rates for health
care providers for benefits covered under a community
health insurance option. Allows a State to elect to
prohibit its Exchange from offering a community health
insurance option if such State enacts a law to provide
for such a prohibition. Establishes a trust fund to be
known as the "Health Benefit Plan Start-Up Fund" to
provide loans for the initial operations of a community
health insurance option.
This amendment:
This amendment prohibits a state or federal statute or
program enacted on or after January 1, 2010, that includes
any of the following, from becoming effective, or from
being enforced, unless the statute or program is approved
by the voters:
Requires individuals to obtain health care coverage.
Requires health care service plans or health insurers to
guarantee issue health care service plan contracts or
health insurance policies to all applicants.
Requires employers to either provide health care coverage
to their employees or pay a fee or tax to the state or
the federal government in lieu of providing that
coverage.
Allows an entity created, operated, or subsidized by the
state or federal government to compete with health plans
and health insurers in the private sector.
Creates a single-payer health care system.
This amendment states that the required voter approval be
by means of a separate statute that is submitted to the
voters by the Legislature, or by initiative statute.
This amendment is prohibited from being construed to
affect, impair, or require electorate approval of laws in
STAFF ANALYSIS OF SENATE CONSTITUTIONAL AMENDMENT 29 Page
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effect as of January 1, 2010, or laws governing the
workers' compensation system.
FISCAL IMPACT
This amendment has not been analyzed by a fiscal committee.
BACKGROUND AND DISCUSSION
According to the author, this constitutional amendment
ensures that California voters will have the final say
regarding any attempted federal or state government
takeover of health care. Specifically, this amendment
prohibits any state or federal statute or program enacted
on or after January 1, 2010 from taking effect in
California until it has been approved by voters, if the
statute or program contains any of the following elements:
(a) an "individual mandate" to purchase health coverage;
(b) a "guaranteed issue" requirement on health plans or
insurers; (c) a "pay or play" feature that requires an
employer to either provide health coverage to its employees
or pay a fee or tax to the state or federal government in
lieu of providing coverage; (d) a "public option" or other
similar feature that allows a state or federal government
created, operated, or subsidized entity to compete against
private sector health plans or insurers; and, (e) a
"single-payer" health care system.
The author states that poll after poll shows a majority of
Americans have concerns about President Obama and
Congressional Democrats' federal health care reform law,
and that this federal law takes health care decisions away
from ordinary Americans and places those decisions with the
government. The author concludes it is clear that the
people's voice is not being heard in either Sacramento or
Washington, D.C., and this amendment makes sure state and
federal legislators cannot ignore the voice of the people.
Federal health care reform
In March 2010, the Congress enacted major health care
legislation in the form of two pieces of legislation that
President Obama signed into law: the Patient Protection
and Affordable Care Act (PPACA) (Public Law 111-148) and
the Health Care and Education Reconciliation Act of 2010
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(H.R. 4872), which made a number of changes to the
provisions of PPACA along with significant changes to the
federal postsecondary education programs.
On March 20, 2010, the Congressional Budget Office (CBO)
released its final cost estimate for the Reconciliation
Act, which encompassed the effects of both pieces of the
federal health reform legislation. CBO and staff of the
Joint Committee on Taxation (JCT) also estimate that by
2019, the two pieces of legislation combined will reduce
the number of non-elderly people who are uninsured by about
32 million, leaving about 23 million non-elderly residents
uninsured. CBO and the staff of the JCT estimate that
enacting both pieces of legislation will produce a net
reduction in federal deficits of $143 billion over the
2010-2019 period. About $124 billion of that savings stems
from provisions dealing with health care and federal
revenues. The other $19 billion results from the education
provisions.
Uninsured in California
Nearly two million Californians lost their health insurance
during 2008 and 2009 - years characterized by high
unemployment - bringing the total number of uninsured in
the state to more than eight million, according to new
estimates from the UCLA Center for Health Policy Research
(UCLA). UCLA also reports that the number represents a 28
percent increase in the number of uninsured since 2007,
when 6.4 million Californians lacked insurance. Today,
nearly one-quarter of all adult Californians lack health
insurance. The biggest increase in the uninsured was among
California's working adults. From 2007 to 2009, the
proportion of unemployed in California's workforce jumped
from 5.4 percent to 12.3 percent. That increase
contributed to the rapid rise in the number of uninsured
adults, from 5.3 million to an estimated 6.8 million,
between 2007 and 2009 - a jump of nearly 6 percentage
points. The harsh economic conditions of 2008 and 2009
reduced the rate of job-based coverage to less than 50
percent for all non-elderly (under 65) Californians,
according to UCLA estimates.
Other states and federal health care reform
According to the National Conference of States
Legislatures' (NCSL) April 23, 2010 paper entitled, "State
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Legislation Challenging Certain Health Reforms, 2010,"
members of at least 39 state legislatures have proposed
legislation to limit, alter or oppose selected state or
federal actions, including single-payer provisions and
mandates that would require the purchase of insurance. In
general, the measures, covering both 2009 and 2010, seek to
make or keep health insurance optional, and allow people to
purchase any type of coverage they may choose.
NCSL indicates that in 30 of the states, the measures
include a proposed constitutional amendment. In a majority
of these states, the state constitution includes an
additional hurdle for passage - requiring either a
"supermajority" of 60 percent or 67 percent for passage, or
requiring two affirmative votes in two separate years, such
as 2010 and 2011.
Additionally, Idaho called for adding a Twenty-eighth
Amendment to the United States Constitution to provide that
Congress shall make no law requiring citizens of the United
States to enroll in, participate in, secure health care
insurance, or to penalize any citizen who declines to
purchase or participate in any health care insurance. This
was adopted by both the Senate and House on March 29, 2010.
In at least 16 states, proposed bills would amend state
law, not the state constitution. These require a simple
majority vote and action by the governor; they also can be
re-amended or repealed by a future state law. NCSL
indicates that in 2010, Virginia became the first in the
nation to enact a new statute section titled, "Health
insurance coverage not required." It became law on March
10, 2010. Idaho and Utah became the second and third
states to enact a similar statute.
Arguments in support
The Howard Jarvis Taxpayers Association (HJTA) writes in
support that it is concerned that any proposed federal
health care expansion could have a detrimental fiscal
impact on California. HJTA states early estimates of the
most recent proposal by the Obama Administration put total
state costs at a startling $2 to $3 billion annually, and
HJTA states that, at a time when California is facing a $20
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billion deficit, it cannot afford a program that will drive
away private health insurance companies and increase the
cost of providing care. HJTA writes that it also
appreciates that this constitutional amendment requires
voter approval to implement a single-payer health care
system. HJTA concludes that increasing government's role
in health care will do nothing but continue to strain a
private sector already struggling under the weight of a
12.5 percent unemployment rate.
Arguments in opposition
The California School Employees Association writes in
opposition that this constitutional amendment would
prohibit many components of the President's health care
reform package from going forward without voter approval.
The United Nurses Association of California/Union of Health
Care Professionals writes in opposition that California has
one of the largest percentages of uninsured residents in
the United States, and we should be putting our money,
focus and energy on expanding coverage and increasing
access.
The Western Center on Law & Poverty (WCLP) writes in
opposition that this constitutional amendment would
prohibit the implementation and enforcement of many
critical components of health care reform law. WCLP writes
that now that PPACA is the law of the land, it is
interested in working with the Legislature on ensuring its
successful enactment, rather than standing in the way of
this historic progress.
Related bills
SB 1378 (Strickland) would have prohibited the expansion of
eligibility in the Medi-Cal program pursuant to federal
health care reform, unless the federal government fully
funds the expansion. SB 1378 failed passage in Senate
Health on April 21, 2009.
COMMENTS
Can the state require voter approval of federal law? The
Supremacy Clause of the United State Constitution (Article
VI, Clause 2) states the following:
This Constitution, and the laws of the United States
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which shall be made in pursuance thereof; and all
treaties made, or which shall be made, under the
authority of the United States, shall be the supreme
law of the land; and the judges in every state shall
be bound thereby, any thing in the Constitution or
laws of any state to the contrary notwithstanding.
This amendment arguably poses a conflict between a state
law (SCA 29) and the requirements of federal law that would
result in a legal challenge to this measure if it were
approved by the voters.
POSITIONS
Support: Howard Jarvis Taxpayers Association
Oppose: California School Employees Association
United Nurses Association of California/Union of
Health Care Professionals
Western Center on Law & Poverty
An individual
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