BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K. Alquist, Chair
BILL NO: SB 810
S
AUTHOR: Leno
B
AMENDED: As Introduced
HEARING DATE: April 15, 2009
8
CONSULTANT:
1
Green/
0
SUBJECT
Single-payer health care coverage
SUMMARY
Establishes the California Healthcare System (CHS) under
which all California residents would be eligible for
specified health care benefits. The CHS would negotiate or
set fees for health care services provided through the
system, and pay claims for those services. The bill would
also establish various boards and offices, with duties as
specified, related to the administration of the system.
CHANGES TO EXISTING LAW
Existing law:
Existing federal and state laws establish several publicly
financed health insurance programs, including Medicare,
Medi-Cal, and the Healthy Families program, that provide
health coverage to eligible individuals and families,
including children, the aged, blind, and disabled, and
pregnant women.
Existing law also provides for the regulation of private
health care service plans by the Department of Managed
Health Care (DMHC), and health insurance policies by the
California Department of Insurance (CDI).
Continued---
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This bill:
This bill would establish the CHS to provide health
insurance coverage to every California resident, as
defined. The bill would prohibit the sale of any private
health care service plan or health insurance policy in the
state, and would make the CHS the primary payer for health
care services in California.
System governance
This bill would establish a new state agency, the
California Healthcare Agency (CHA), which would oversee the
CHS, and would be comprised of the following entities:
The Healthcare Policy Board
The Office of Patient Advocacy
The Office of Health Planning
The Office of Healthcare Quality
The Healthcare Fund
The Public Advisory Committee
The Payments Board
Partnerships for Health
The bill would provide for the appointment of a
commissioner to the CHA by the Governor, on or before March
10, 2010, and subject to confirmation by the Senate. The
appointed commissioner would be the chief officer of the
CHA, and would be assigned various duties, including duties
to establish the CHS budget; set goals, standards and
priorities for the system; set rates, fees and prices;
establish a CHS enrollment system, systems for electronic
referral, medical records, claims, and reimbursement;
establish a prescription drug and durable medical equipment
formulary, and 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.
The bill would establish the Healthcare Policy Board to
establish goals and priorities for the system, the scope of
services to be provided to patients, and guidelines for
evaluating the performance of the system, its officers,
health planning regions, and providers. The bill would
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also establish a Public Advisory Committee, comprised of a
range of providers, including physicians, nurses,
hospitals, allied health professionals, clinics, other
providers, as well as other stakeholders, including
consumers, labor, and business, to advise the Healthcare
Policy Board on all matters related to the system.
The bill would establish 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, as
defined, to receive and respond to consumer complaints
regarding the system, and to develop educational and
informational guides for consumers to inform them of their
rights and benefits within the system.
This bill would establish the Office of Health Planning to
plan for the short- and long- term health care needs of
Californians, pursuant to 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.
The bill would establish the Office of Health Care Quality,
headed by a chief medical officer, in order to support the
development of high quality, coordinated health care
services, establish processes for measuring the quality of
care delivered in the health insurance system, and
establish a means to make changes needed to improve health
care quality. The bill would assign various duties to the
chief medical officer, including establishing
evidence-based standards of care, identify, measure, and
prevent medical errors within the system, and to recommend
to the commissioner a benefits package based on clinical
efficacy for the system, including priorities for needed
benefit improvements.
The Partnerships for Health would be established by the
bill to improve health through community health
initiatives, support the development of innovative means to
improve care quality, promote efficient, coordinated care
delivery, and educate the public, as specified.
The bill would also establish, within the Office of the
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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.
Transition
This bill would require the system to be operational no
later than two years after it has been determined that the
Healthcare Fund has sufficient revenues to fund the costs
of implementing the bill's provisions. The bill would
require the transition to be funded from a loan from the
General Fund and from other sources, including private
sources identified by the commissioner. A transition
advisory group, comprised of the officers of the system,
specified stakeholders and health care policy experts, and
representatives from all existing departments and agencies
affected by establishment of the system, would be
established to advise the commissioner on all aspects of
implementation of the CHA.
Regional planning
This bill would require the commissioner to establish up to
10 health planning regions, for the purposes of local and
community-based planning for the delivery of high quality,
cost-effective care. The planning regions would be
comprised of geographically contiguous counties grouped
according to specified criteria including patterns of
health utilization, health needs of the population,
geography, and demographic characteristics.
The commissioner would be required to appoint a director
for each region who would be required to identify and
prioritize regional health care needs and goals, assess
projected revenues and expenditures to ensure fiscal
solvency of the system at a regional level, establish and
implement a regional capital management plan and operating
budgets, and undertake other duties as specified.
The bill would require each regional planning director to
appoint a regional planning board to advise the director on
regional health policy and to appoint a regional medical
officer who would administer the regional Office of
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Healthcare Quality. The regional medical officer would
also be required to assure the evaluation and measurement
of quality of care delivered in the region, oversee the
establishment of integrated health care service networks,
and perform other specified duties.
Eligibility
The bill would deem all California residents eligible for
the CHS. Residency would be based on physical presence in
the state with the intent to reside. This bill would also
state legislative intent for the system to provide health
care coverage to state residents who are temporarily out of
the state.
The bill would provide that visitors to the state who
receive care under the CHS will be billed for all services
rendered. Additionally, the bill would deem 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. This
bill also would provide 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. The bill would require coverage for
emergency care obtained out of state to be paid according
to rates and conditions set forth by the commissioner.
Benefits
The bill would provide 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:
inpatient and outpatient health facility services;
inpatient and outpatient professional health care
provider services by licensed health care professionals;
diagnostic imaging, laboratory services, and other
diagnostic and evaluative services;
durable medical equipment including prosthetics,
eyeglasses, and hearing aids and their repair;
rehabilitative care;
emergency transportation and necessary transportation for
health care services for disabled indigent persons;
language interpretation and translation for health care
services;
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child and adult immunizations 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;
acupuncture;
blood and blood products;
emergency care services;
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;
care of up to 100 days in a skilled nursing facility
following hospitalization;
dialysis;
chronic disease management;
family planning services and supplies;
early and periodic screening, diagnosis, and treatment
services for individuals under 21 years of age; and,
benefits offered by a bona fide church, sect,
denomination, or organization whose principles include
healing entirely by prayer or spiritual means.
This bill would allow the commissioner to expand benefits
beyond the minimum outlined above when expansion meets the
intent of the statute and can be sufficiently funded. The
bill would also exclude 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 services of a provider or facility that is
not licensed by the state.
The bill would prohibit co-payments and deductibles for
preventive care or when prohibited by federal law, but
would allow, commencing in the third year of CHS operation,
co-payments and deductibles for other services, as
specified. The bill would require 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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This bill would allow eligible beneficiaries to choose a
primary care provider, and authorize women to choose an
obstetrician-gynecologist in addition to a primary care
provider. The bill would require individuals enrolling in
integrated health care systems to retain membership for at
least one year after an initial three-month evaluation
period during which they could withdraw at any time. The
bill also would require patients to have a referral from a
primary care provider to see a specialist, except for a
dentist, optometrist, or ophthalmologist, as specified.
The bill would also allow a specialist to serve as the
primary care provider if the provider agrees to coordinate
the patient's care.
For the first six months of system operation, the bill
would provide that no specialist referral shall be required
for patients who had been receiving care from a specialist
prior to initiation of the system. This bill would allow a
patient to appeal the denial of a referral through the
dispute resolution mechanism established by the
commissioner.
Budgeting and financing provisions
The bill would establish the Healthcare Fund (Fund) within
the State Treasury administered by a director appointed by
the commissioner, into which funds would be deposited to
support CHS costs. The bill would provide 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.
The bill would require the Fund director to establish a
system account to provide for all annual expenditures on
health care, and a reserve account to maintain a reserve
sufficient to provide for the payment for all losses and
claims for which the system may be liable.
The bill would require 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. The bill
would specify the types of cost control measures the
commissioner could implement, including changes in the
system of health facility administration that improve
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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.
The bill would provide that at the regional level, if the
commissioner or regional planning director determines that
regional revenue and expenditure trends indicate a need for
regional cost containment, specified cost control measures
may be followed.
The bill would provide that, if the Budget Act has not been
enacted by June 30th of any year, all moneys in the reserve
account of the Healthcare Fund would be used to implement
the bill's provisions until funds became available through
the Budget Act. The bill would also require the State
Controller to make one or more General Fund loans to the
fund for the purpose of making payments for health care
goods and services, if the reserve funds are exhausted.
The commissioner would be required to establish a budget
for all expenditures, specifying a limit on total annual
state expenditures and establish regional allocations to
cover a three-year period. The commissioner would be
required to limit the growth of spending on a statewide and
regional basis with reference to average growth in state
domestic product across multiple years, population growth,
advances in technology, and other factors. Additionally,
the bill would require the commissioner to adjust the
system budget so that aggregate spending for the state
would not exceed spending by more than five percent.
The bill would require 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 and shall include
various adjustments including cost-of-living differences
between regions, health risk of enrollees, workforce
development needs, and projected savings due to improved
access and efficiency of care delivery, among other
variables.
This bill would require the commissioner to seek necessary
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approval so that all current federal payments for health
care are paid directly to CHS, which would then assume
responsibility for all benefits and services paid by the
federal government with those funds. This bill would also
require the commissioner to establish formulas for
equitable contributions to CHS from counties and other
local government agencies.
The bill would provide that the system would be secondarily
responsible for providing care, to the extent that the
federal, state, or county programs are not transferred to
the system. Additionally, the bill would require the CHS
to cover the Medicare share of cost expenses to the extent
that the commissioner obtains authorization to incorporate
Medi-Cal or Medicare revenues into the Fund.
This bill would provide that until a single public payer
for all health care in the state is established, health
care costs may continue to be collected by "collateral
sources" including insurance policies, health plans,
employers, employee benefit contracts, government benefit
programs, judgments for damages, and any liable third
party.
Health care providers
Under the bill, the commissioner would be required to
establish a Payments Board that is responsible for
negotiating reimbursements and establishing a uniform
payments system for fee-for-service providers, essential
community providers, and group medical practices. The
bill would also require the Payments Board to negotiate
compensation for upper level managers subject to specified
guidelines, and to report annually to the commissioner on
the status of health care providers and upper level
management reimbursement, including satisfaction with
reimbursement levels and the sufficiency of funds
allocated.
The bill would allow providers to choose to be compensated
by the system or by persons to whom they provide services,
in which case they may establish charges for their
services. Providers who accept any payment from CHS would
not be allowed to bill a patient for any covered service.
Providers electing to be compensated under a
fee-for-service arrangement would be required to choose
representatives of their specialties to negotiate
reimbursement rates with the Board consistent with the
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state action doctrine of the federal anti-trust law.
The bill would require provider compensation to be
actuarially sound and include a just and fair return for
health care providers. The bill would require physicians
to be reimbursed for all covered services provided. The
bill would require payment schedules that would be in
effect for three years, and for bonus payments associated
with specified performance standards and goals for the
system, including service to medically underserved areas.
The bill would allow all licensed and accredited health
care providers in the state to participate in the CHS, and
would prohibit a provider from refusing to care for a
patient based on any form of discrimination.
Under the bill, integrated health delivery systems,
essential community providers, and group medical practices
that provide comprehensive, coordinated services would be
required to negotiate operating budgets with regional
planning directors and would be allowed to choose to be
reimbursed on the basis of a capitated system or a
non-capitated operating budget that covers all costs of
providing health care services. The bill would prohibit
payments from capitated or non-capitated operating budgets
to pay for capital expenses, with specified exceptions.
Health care systems operating under capitated or
non-capitated budgets would be required to immediately
report any projected operating deficits to the regional
planning director who would then evaluate whether to make
an adjustment in the operating budget.
The bill would provide that margins generated under a
health care system's operating budget could be retained and
used to meet the health care needs of the population,
conditioned upon specified restrictions. Health facilities
operating under system operating budgets would be allowed
to raise and expend funds from sources other than the
system including but not limited to, private or foundation
donors for purposes related to the goals of the system.
Funding of health facilities and equipment
The bill would direct 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
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acquisitions undertaken. This bill would require the
commissioner to develop and maintain capital inventories on
a regional basis and to establish a process whereby those
intending on making capital investments or acquisitions
would be required to prepare a business plan, as specified.
The bill would require the establishment of a competitive
bidding process, as described, for the development of
capital management plans that meets the needs of the system
and provides that the system may fund, partially fund, or
participate in seeking funding for those capital projects.
The bill prohibits capital investments from being made from
operating budgets.
This bill would require the regional planning directors to
develop a regional capital development plan pursuant to the
CHS capital management plan established by the
commissioner. The bill would require regional planning
directors to make financial information available to the
public when the system's contribution to a capital project
is greater than $25 million, and would require the
commissioner to establish conflict of interest requirements
in regard to capital outlays made by the system.
Purchase of prescription drugs
Under the bill, the commissioner would be required to
establish a budget for the purchase of prescription drugs
and to use the purchasing power of the state to obtain the
lowest possible prices for prescription drugs. This bill
also would require the commissioner to establish a budget
to support research and innovation recommended by the
system to support the goals and standards of the system.
The commissioner would also be required to establish a
budget to support the training, development and continuing
education of health care providers and the health care
workforce needed to meet the health care needs of the
population.
Health care premiums
The bill would establish 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
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adequate revenue to support the system and ensure
actuarially sound funding for the system.
The bill would require the Premium Commission to be funded
with an appropriation in the Budget Act of 2010, and would
authorize it to obtain grants from, and contract with,
individuals and entities and receive charitable
contributions or any other lawful source of income in order
to perform its function. The bill would require the
Premium Commission, on or before January 1, 2011, to submit
a recommendation for a premium structure to the Governor
and the Legislature.
FISCAL IMPACT
According to the Assembly Appropriations Committee analysis
of SB 840 (Kuehl) from the 2007-2008 legislative session,
which contained provisions nearly identical to those
proposed in this bill, annual statewide costs for a
California single payer system would exceed $200 billion.
The analysis states that the system costs would be in lieu
of current public, employer, worker, and individual health
care costs.
The analysis states that major reductions in particular
types of health spending are likely to occur under a single
payer system, including reductions in administrative
overhead, which is a significant portion of expenditures in
the current health coverage system. Additionally, the
analysis states that a single payer system may provide
greater opportunity to stabilize medical inflation compared
to our current rate of health care spending growth, and
could result in increased tax revenues due to the
elimination of many health-related tax deductions leveraged
by businesses and families under current law.
With regard to General Fund impacts, the analysis states
that there are numerous impacts possible under a single
payer system, as the state would be obligated to bolster
the system with General Fund augmentations or loans,
particularly if major funding shortfalls were to occur.
The analysis states that any cost overruns or unpredicted
expenses would generate significant General Fund pressures.
The analysis states that additional General Fund effects
would come from reductions in tax revenues from insurance
companies, economic and labor market disruptions, and
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one-time implementation costs.
BACKGROUND AND DISCUSSION
According to the author, this bill would provide fiscally
sound, affordable health care to all Californians, provide
every Californian the right to choose his or her own
physician, and control health cost inflation. The author
states that health care costs are crushing California's
economy and the state budget, forcing steep annual cuts in
health care access and quality of care for Californians and
their employers. The author states that health insurance
premiums have risen 87 percent since 2000, and that health
care costs have outpaced increases in wages by a ratio of
4:1 since 2000.
The author states that in California, an estimated $212
billion was spent on health care last year, which is enough
money to provide every resident of the state with excellent
healthcare, ensure fair and reliable reimbursements to
providers, and guarantee a high quality of care for all.
The author states that currently, about half of every
dollar spent on health care is squandered on clinical and
administrative waste, insurance company profits, and
overpriced pharmaceuticals. The author argues that this
bill would eliminate waste by consolidating the functions
of many insurance companies into one comprehensive
insurance plan, and by leveraging California's purchasing
power to buy prescription drugs and durable medical
equipment in bulk, thereby saving the state and consumers
billions of dollars each year.
The author states that under this bill, eligibility would
be based on residency, instead of on employment or income,
ensuring that no California resident would ever again lose
his or her health insurance because of unaffordable
insurance premiums, because he or she changes or loses a
job, or has a pre-existing medical condition. The author
states that this bill takes an approach of shared
responsibility, with individuals, employers and government
making contributions to ensure everyone gets health care,
and that this bill would involve no new spending on health
care, as the CHS would be supported by federal, state and
county monies already being spent on health care, as well
as by affordable insurance premiums that replace all
premiums, deductibles, out-of-pocket payments and
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co-payments now paid by employers and consumers.
The author argues that, under this bill, the delivery of
care would remain as it is; a competitive mix of public and
private providers, and that all consumers would have
complete freedom to choose their health care providers.
The author states that this bill would require sound
reimbursements for providers, and that doctors, nurses,
hospitals and other health care providers would no longer
provide uncompensated care as they would receive fair and
reasonable reimbursements for all covered services they
provide.
The author states that this bill would make our health care
system more reliable and secure by stabilizing the growth
in health spending; linking spending increases to state
gross domestic product, population growth, employment rates
and other relevant demographic indicators; combining cost
controls with medical standards that use the best available
medical science; and placing an emphasis on preventative
and primary care to improve California's overall health in
a way that also saves billions of dollars.
Uninsured Californians
According to a 2008 California HealthCare Foundation (CHCF)
report citing research from the Employee Benefit Research
Institute, the percent of uninsured Californians under age
65 has continued to rise over the last two decades as
employer-sponsored health insurance has declined. CHCF
states that between 1987 and 2007, employer-sponsored
coverage declined almost 8 percent, and that although
Medi-Cal and individually purchased coverage partially
offset that decline, more than 20 percent (6.6 million) of
Californians remain uninsured. CHCF states that California
has a lower percentage of individuals with
employer-sponsored coverage and a higher proportion of
uninsured when compared to the nation.
CHCF also states that workers at private sector businesses
of all sizes are experiencing an increased likelihood of
being uninsured, although it is most pronounced in
businesses with fewer than 10 employees. More than a third
of the uninsured in California have family incomes of more
than $50,000 per year; 27 percent of families with incomes
between $25,000 and $50,000 are uninsured. Seventy percent
of uninsured children are in families where the head of the
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household has a year round, full-time job. In addition,
nearly 60 percent of the state's uninsured are Latino.
Fiscal analyses
California-specific analyses of single payer proposals have
been completed of SB 921 (Kuehl), and SB 840 (Kuehl), 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.
In 2005, the Lewin Group, an independent health care policy
and research firm, published an analysis of SB 921 finding
that total health spending for California residents under
the current system was about $184.2 billion in 2006, and
that the proposed single payer program would achieve
universal coverage while reducing total spending in the
state by a net $7.9 billion. The analysis stated that this
savings would be realized by reducing administrative costs
within the current system, and savings from bulk purchasing
of prescription drugs and durable medical equipment. The
Lewin Group analysis anticipated a substantial increase in
utilization as a result of universal coverage and access,
but found that the increased utilization would be
substantially offset by roughly $20 billion in
administrative savings and $5.2 billion in bulk purchasing
savings.
The Lewin Group analysis stated that the proposed single
payer system would constrain growth in future spending to
match growth in the state gross domestic product, expected
to be about 5.14 percent annually through 2015. By 2015,
the analysis found that health care spending under the
single payer program would be about $68.9 billion less than
projected spending under the current health care system.
The analysis stated that total savings over the 2006
through 2015 period would be $343.6 billion, with savings
to state and local governments over this ten-year period of
about $43.8 billion.
The Legislative Analyst's Office (LAO) published an
analysis of SB 840 in June 2008. The LAO reviewed and
updated the Lewin analysis with respect to single payer
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costs and revenues, and estimated annual costs of $210
billion in 2011, growing to $252 billion in 2015.
Additionally, the LAO forecast of costs and revenues over
the 2011-2015 period showed an estimated annual shortfall,
with costs outpacing revenues by $42 billion in 2011 and
$46 billion in 2015. One-half of the shortfall was due to
updated medical cost data over the 2006-2011 period.
Another 40 percent of the shortfall was attributed to
California-specific and actual wage data, resulting in
lower revenues than the Lewin report had assumed. The Lewin
report relied on national survey data rather than actual
California data. The remaining 10 percent of the shortfall
highlighted by the LAO was due to the assumed costs of
funding a reserve, a difference in the availability of
local funding, costs for administration, health care
utilization changes, and costs of drug purchasing.
According to the LAO, payroll taxes for employer and
employees would need to be 16 percent, combined, for the
single payer costs and revenues to balance at the start of
the forecast period. These taxes are higher than the 12
percent combined taxation rate that was proposed in SB
1014.
Related legislation
SB 1 (Steinberg and Alquist) expands the Medi-Cal and
Healthy Families program eligibility to cover all children
in families with incomes at or below 300 percent of the
federal poverty level (FPL). Establishes a Healthy
Families buy-in program for children in families with
incomes above 300 percent of the FPL. Establishes
presumptive eligibility for children in families applying
for Medi-Cal at county eligibility offices. Expands
eligibility for California Children's Services (CCS)
program. This bill is currently in the Senate Health
Committee.
SB 92 (Aanestad) allows out-of-state carriers to offer
plans in California without being licensed in California,
and allows health plans and insurers to offer plans and
policies that do not include all state mandated benefits.
Encourages the offering of high deductible health plans, as
specified, allows health plans and insurers to offer
healthy action incentives and rewards programs, modifies
provisions pertaining to guaranteed association plans, as
specified, and allows health plans and insurers to offer a
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single policy that provides health care coverage and
workers' compensation benefits. States the intent of the
Legislature to enact legislation that would realign
Medi-Cal benefits with those offered through private health
care coverage. Contains several provisions to encourage or
require the use of electronic health records and personal
health records. Requires DHCS to develop a plan for the
use of certain disproportionate share hospital funds for
creation and expansion of primary care clinics, and
provides specified tax credits for health care providers,
including those who provide services in rural areas, and
for employers who offer health insurance to their
employees. Also allows various income tax deductions
related to the costs of health insurance and health savings
accounts, as specified. Modifies existing law pertaining
to the supervision of medical assistants. Imposes a fee on
money transmissions involving undocumented residents, to be
used to pay for emergency medical care to undocumented
residents. This bill is currently in the Senate Health
Committee.
Prior legislation
SB 840 (Kuehl, 2008) would have implemented a system
substantially similar to that proposed by this year's SB
810. This bill was vetoed.
SB 1014 (Kuehl, 2008), a companion to the version of SB 840
introduced in the 2007-2008 legislative session, would have
imposed specified health care coverage taxes on employer
payroll, employee wages, self-employment income, and other
non-wage income, as specified, and direct revenues
generated from these taxes to fund the single payer system
that would have been created by SB 840. This bill was held
by the Senate Revenue and Taxation Committee.
ABX1 1 (Nunez, 2008) would have required all California
residents to carry a minimum level of health insurance
coverage for themselves as well as for their dependents,
established a state purchasing pool through which
qualifying individuals would be allowed to obtain
subsidized or unsubsidized health care coverage, expanded
eligibility for the Medi-Cal and Healthy Families programs,
and increased Medi-Cal provider rates for hospitals and
physician services. Would have required health plans and
insurers to offer and renew, on a guaranteed basis,
individual coverage in five designated coverage categories,
STAFF ANALYSIS OF SENATE BILL SB 810 (Leno) Page 18
regardless of the age, health status, or claims experience
of applicants, and established new modified community
rating rules for the pricing of individual coverage. Would
have contained provisions intended to reduce or offset a
portion of the costs of health coverage as well as several
new programs and initiatives related to the prevention and
promotion of health and wellness, and would have expressed
intent that financing for the bill's provisions come from a
variety of sources, including federal funds, fees from
employers, revenues from counties, fees paid by acute care
hospitals, premium payments from individuals, and funds
from a new tobacco tax. Some of these financing measures
would have been contained in a proposed ballot initiative.
This bill failed passage by the Senate Health Committee.
SB 48 (Perata, 2007) proposed a health care reform plan
designed to insure all working Californians and their
dependents, as well as all children regardless of residency
status in households with incomes up to 300 percent of the
federal poverty level. These provisions were deleted and
subsequently replaced with different provisions that did
not pertain to health care reform.
AB 8 (Nunez, 2007) proposed a health care reform plan
designed to insure all working individuals and dependents
employed by firms of two or more employees, all children,
regardless of residency status, with household incomes up
to 300 percent of the federal poverty level, and eventually
low-income childless adults. This bill was vetoed.
SB 32 (Steinberg, 2008) and AB 1 (Laird, 2008) would expand
eligibility for Healthy Families to children with family
incomes at or below 300 percent of the FPL and would delete
the specified citizenship and immigration status
requirements for children to be eligible for Medi-Cal and
Healthy Families. The bill would also allow applicants to
self-certify their income and assets for the purposes of
establishing eligibility for Healthy Families, and would
establish a Medi-Cal presumptive eligibility program, as
specified. SB 32 was placed on the Assembly inactive
file, and AB 1 was held on the Assembly floor.
AB 2 (Dymally, 2008) and ABX1 3 (Dymally, 2007) proposed to
restructure the MRMIP, including eligibility, benefits, and
premium rates for the program, and would require all health
care service plans and disability insurers selling health
STAFF ANALYSIS OF SENATE BILL SB 810 (Leno) Page 19
insurance in the state to share in the costs of MRMIP, by
either paying a fee to the state to support MRMIP costs, or
by offering coverage in the individual market on a
guaranteed issue basis with community rating of premiums
and prior rate approval requirements. The bill required
health care service plans and health insurers in the
individual insurance market to provide coverage on a
guaranteed issue basis to individuals not eligible for
MRMIP starting January 1, 2009. AB 2 was vetoed. ABX1 3
was held in the Assembly Health Committee.
AB 1554 (Jones, 2008) would require health care services
plans and health insurers to receive approval from the DMHC
or DOI to increase premiums, co-payments, co-insurance
obligations, and deductibles. The bill would require both
departments to notify the public of, and hold hearings on,
applications from plans or insurers to increase rates.
This bill failed passage in the Senate Health Committee.
SB 236 (Runner, 2007) would have enacted the Cal CARE
program to increase access to health care services in the
state and provide health coverage incentives. This bill
was held in the Senate Rules Committee.
SB 840 (Kuehl, 2006) would have implemented a system
substantially similar to that proposed by this year's SB
810. This bill was vetoed.
AB 772 (Chan, 2005) would have created the California
Healthy Kids Insurance Program, to expand health care
coverage to all California children. This bill was vetoed.
SB 921 (Kuehl, 2004) also would have implemented a system
substantially similar to that of this year's SB 810. SB
921 was held in the Assembly Health Committee.
SB 2 (Burton), Chapter 673, Statutes of 2003, enacted the
Health Insurance Act of 2003, to provide health coverage to
employees (and in some cases their dependents) who do not
receive job-based coverage and who work for large and
medium employers. SB 2 was repealed by Proposition 72, a
voter referendum on the November 2004 ballot.
Arguments in support
STAFF ANALYSIS OF SENATE BILL SB 810 (Leno) Page 20
Supporters state that as health insurance costs steadily
rise, employers are increasingly reducing or dropping
coverage for employees, that the increase in high
deductible health plans, which require deductibles and
co-payments which are generally unaffordable, have failed
to stem the rise in health care costs, and that half of all
bankruptcies in the United States are now related to
medical costs. Supporters cite this as evidence that
Californians can no longer rely on the current system of
private insurance, as no one is guaranteed to receive care
when they become ill, and many who are insured often have
inadequate coverage. Supporters state that this bill would
provide every Californian with health care coverage that
would provide comprehensive benefits and a high quality of
care. Supporters state that this bill would simplify the
currently complex, multi-payer system, eliminate billions
of dollars in administrative waste, generate savings
through increased access to primary and preventive care, as
well as bulk purchasing of prescription drugs and durable
medical equipment, allow patients to choose their own
doctors, eliminate coverage exclusions for preexisting
conditions, and ensure continued coverage regardless of
employment status.
The County Health Executives Association of California
(CHEAC) would support the bill if amended to relieve
counties of their requirements to provide health care to
indigent and dependent poor persons. CHEAC states that
with the implementation of universal health coverage, there
will no longer be a need for this requirement on counties.
Additionally, CHEAC argues that local public health funding
must be preserved, and that health realignment revenues
dedicated to communicable disease control, epidemiology,
public health laboratories, and public health nursing
should be maintained at the local level.
Arguments in opposition
Opponents state that costs associated with this bill would
create an expensive labyrinth of bureaucracy, and that
competition among private companies leads to lower costs
and better care. Opponents assert that a state-run health
care system would eliminate private health plans and
insurers, thereby forcing people to rely upon the state to
take care of their health needs, and limiting medical
advances because of decreased competition. Opponents argue
that this bill would extend taxpayer obligations too far,
STAFF ANALYSIS OF SENATE BILL SB 810 (Leno) Page 21
and damage the state's competitiveness for jobs. They
state it would be impossible to replace the current system
of health care without major increases in taxes, both to
cover currently insured individuals, as well as the
uninsured, which would discourage business growth, and hurt
state investments, and that out-of-state individuals would
move to California to take advantage of the new health care
system adding to the state's economic burden. Opponents
disagree with the premise that a single payer system will
generate substantial savings from lowered administrative
costs and profits, as administrative costs will not be
eliminated under a single payer system. They assert that
competitive forces in the marketplace are vital in health
care, and that while California's premiums have increased,
they are still lower than other large markets. Opponents
also state that single payer systems in other countries
have demonstrated limited access and longer waiting times
for services.
COMMENTS
1. Bill does not contain all revenue sources needed to
fund the CHS. Revenue sources proposed by this bill would
include a redirection of state and local funding to the
CHS, federal monies, to the extent the federal government
authorizes federal payments to be paid directly to the CHS,
and health coverage premiums. The bill does not propose
new taxes similar to those proposed in last year's SB 1014,
thus omitting much of the funding that would be needed to
support the proposed system.
2. Proposed technical and clarifying amendments:
Page 47, line 29:
?the time of issuance of the grant, loan, or line of
credit, or?
Page 52, line 21:
140253. (a) On or before January 1, 2011 2012, the
Premium?
STAFF ANALYSIS OF SENATE BILL SB 810 (Leno) Page 22
Page 58, line 25:
?condition, to document eligibility or to act in on his or
her own behalf,?
Page 61, lines 31 to 33:
(b) Commencing in the third year of the system's operation,
the commissioner may impose a deductible payment and
co-payment pursuant to the determination made under
subdivision (a), except as specified under subdivisions (c)
and (d).
Page 70, lines 11 to 12:
?developed by others other institutions that have had a
positive impact on care quality, such as the Centers for
Disease Control and Prevention , the?
POSITIONS
Support: California Nurses Association (sponsor)
California Teachers Association (co-sponsor)
ACLU of Southern California
American Association of University Women
American Federation of State, County and Municipal
Employees
American Medical Student Association
Bay Area Veterans of the Civil Rights Movement
California Commission on the Status of Women
California Communities United Institute
California Federation of Teachers
California Labor Federation, AFL-CIO
California Professional Firefighters
California Retired Teachers Association
California School Employees Association
California Society for Clinical Social Work
City of San Pablo
Consumer Federation of California
County Health Executives Association (if amended)
Diablo Valley Democratic Club
Easter Hill United Methodist Church
Glendale City Employees Association
Health Access California
Health Care for All California
Kennedy Club of the San Joaquin
Lamorinda Peace and Justice Group
STAFF ANALYSIS OF SENATE BILL SB 810 (Leno) Page 23
League of Women Voters of San Joaquin County
Los Angeles Unified School District
Manteca Democratic Club
Organization of SMUD Employees
Rainbow Coalition West Contra Costa
San Bernardino Public Employees Association
San Fernando Valley Interfaith Council
San Luis Obispo County Employees Association
Santa Rosa City Employees Association
Service Employees International Union
St. John of Good Catholic Church
United Nurses Associations of California/Union of
Health Care Professionals
West Contra Costa Concilio Latino
West Contra Costa Latino/a Democratic Club
Western Center on Law & Poverty
Numerous individuals
Oppose: America's Health Insurance Plans
Anthem Blue Cross
Association of California Life and Health
Insurance Companies
California Association of Health Underwriters
California Association of Health Plans
California Chamber of Commerce
California Independent Grocers Association
California Taxpayers' Association
Concerned Women for American
Health Net
National Federation of Independent Business
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