BILL ANALYSIS SB 840 Page 1 SENATE THIRD READING SB 840 (Kuehl) As Amended August 11, 2008 Majority vote SENATE VOTE :23-15 HEALTH 12-5 APPROPRIATIONS 12-4 ----------------------------------------------------------------- |Ayes:|Dymally, Bass, Berg, De |Ayes:|Leno, Caballero, Davis, | | |La Torre, De Leon, | |DeSaulnier, Furutani, | | |Hancock, Hayashi, | |Huffman, Karnette, | | |Hernandez, Jones, Lieber, | |Krekorian, Lieu, Ma, | | |Ma, Salas | |Nava, Solorio | | | | | | |-----+--------------------------+-----+--------------------------| |Nays:|Nakanishi, Emmerson, |Nays:|Walters, Emmerson, La | | |Gaines, Huff, Strickland | |Malfa, Nakanishi | | | | | | ----------------------------------------------------------------- SUMMARY : 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. Makes CHS become operative when the Secretary of Health and Human Services determines the Healthcare Fund will have sufficient revenues to fund the costs to implement this bill. Specifically, this bill : 1)Establishes CHS in state government, to be administered by CHA, an independent agency under the control of the Healthcare Commissioner (Commissioner). 2)Prohibits any health care service plan or health insurance policy, except for CHS, from being sold in California for services provided by CHS. Governance : 3)Provides for a Commissioner, appointed by the Governor and confirmed by the Senate, to be the chief officer of CHS and to administer all aspects of CHA. 4)Gives the Commissioner broad powers to establish CHS budget, SB 840 Page 2 goals, standards, and priorities, set rates, and perform other duties, as specified. 5)Establishes conflict-of-interest rules for the Commissioner. 6)Requires the Commissioner to oversee the establishment of several boards and committees, including: a) The Healthcare Policy Board (Board), to set system goals and priorities, determine the scope of services provided, and determine when a change in premium structure is needed; b) The Office of Patient Advocacy, headed by a patient advocate; c) The Office of Health Planning, to plan for the short- and long-term health needs of California; d) The Office of Health Care Quality, to support the delivery of high quality care and promote provider and patient satisfaction; e) The Healthcare Fund within the State Treasury, to be administered by a director appointed by the Commissioner; f) The Public Advisory Committee, to advise the Board on all matters of health insurance system policy; g) The Payments Board, to establish and supervise a uniform payments system and compensation plan for providers and managers; and, h) Partnerships for Health, 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. 7)Directs the Commissioner to carry out numerous duties, including establishing health care regions; overseeing the establishment of real and virtual locally-based integrated service networks, as specified; creating a systematic approach to measuring and managing care quality; ensuring that state purchasing power achieves the lowest possible prices for CHS without adversely affecting needed pharmaceutical research; SB 840 Page 3 assessing projected revenues and expenditures to assure financial solvency; negotiating and setting rates, fees, and prices; implementing eligibility standards; establishing an enrollment system; and, reporting to the Legislature and Governor annually. 8)Establishes in the Office of the Attorney General an Office of the Inspector General for CHS with broad powers to investigate, audit, and review the financial and business records of individuals and entities that provide services or products to the system and are reimbursed by the system. 9)Requires the operative date of this bill, except for provisions related to the California Healthcare Premium Commission (CHPC), to be the date that the Secretary of Health and Human Services notifies the Legislature that he/she has determined that the Healthcare Fund will have sufficient revenues to fund the costs of implementing this bill. Requires CHS to be operative within two years of the operative date of this bill. Prohibits any state entity from incurring any transition or planning costs prior to the operative date of this bill. 10) States that the activities of CHPC are not subject to #9) above, and those provisions in this bill related to CHPC become operative on January 1, 2009. 11) Requires the Commissioner to: a) Assess health plans and insurers for care provided by CHS if private coverage extends into CHS' operational time; b) Implement a means to assist persons displaced from employment as a result of CHS; c) Appoint a transition advisory group whose duties include recommending how to integrate health care delivery services and responsibilities of several state departments into CHS; d) Establish up to ten CHS regions composed of contiguous counties grouped according to utilization patterns, health care resources, health needs, geography, and population; and, e) Appoint a regional planning director for each region to SB 840 Page 4 administer health insurance regions with duties as specified. 12) Requires regional medical officers to administer all aspects of the regional office of health care quality with duties as specified. 13) Requires each region to have a regional health planning board consisting of 13 members appointed by the regional planning director in order to advise and make recommendations to the regional planning director on all aspects of regional health policy. Funding : 14) Requires the Commissioner to maintain a reserve fund to cover unforeseen costs, and requires the system to hold an actuarially sound reserve at all times that is consistent with appropriate risk-based capital standards to assure financial solvency of the system. 15) Requires that moneys currently held in reserve by state health programs, city and county contributions as determined by the commissioner, and federal moneys for health care held in reserve in federal trust accounts be transferred to the state health care reserve account (reserve account) when the state assumes financial responsibility for health care under this bill that is currently provided by those programs. 16) Authorizes the Commissioner to adjust payments to providers and managers that fail to meet contractual performance standards. 17) Requires the Commissioner, if he/she determines that statewide revenue trends indicate the need for statewide cost control measures, to convene the Board to discuss the need for cost control measures and immediately report to the public. 18) Provides that cost control measures may include: changes in the health insurance system or health facility administration that improve efficiency; changes in the delivery of health care services that improve efficiency and care quality; postponement of introduction of new benefits or benefit improvements; postponement of introduction of new SB 840 Page 5 benefits or benefit improvements; adjustment of health care providers budgets to correct for inappropriate utilization, deficiencies in care quality or fraud; limitations on the reimbursement of system managers and upper level managers; limitations on health provider reimbursement; limitations on aggregate reimbursements to manufacturers of pharmaceutical and durable and nondurable medical equipment; deferred funding of the reserve account within the Fund; imposition of copayments or deductible payments according to certain guidelines, including that no copayments be established for preventive care; and, 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. 19) Authorizes the Commissioner, if cost control measures are not sufficient to meet revenue shortfalls, to recommend other measures including increased premium payments. 20) Permits the imposition of copayments and deductibles beginning in the third year of the system's operation. Limits the deductible and copayment to $250 per person and $500 per family each year. Prohibits any deductible or copayment for Medi-Cal eligible persons. Excludes from these limits copayments for treatments by a specialist without a referral from a primary care provider. Permits the Commissioner to establish copayment amounts for treatments by a specialist without a referral. 21) Permits the postponement of new benefits or benefit improvements, deferred funding of the reserve account, waiting periods, or premium increases to only occur on a statewide basis and only with the concurrence of the Commissioner and Board. 22) Requires, when the state budget has not been enacted by June 30th of any year, that moneys in the reserve account be used to implement this bill. Requires the State Controller, if those reserve funds are exhausted, to make one or more General Fund (GF) loans not to exceed an undetermined amount to the Healthcare Fund. 23) Directs the Commissioner to annually prepare a system budget that specifies a limit on total annual expenditures and SB 840 Page 6 establishes an allocation for each health care region that covers a three-year period. 24) Requires the Commissioner to limit the growth of spending on a statewide and regional basis by reference to average growth in state domestic product across multiple years, population growth, and other factors. 25) Directs the Commissioner to annually set the total funds to compensate managers and providers. 26) Allows providers who choose to be compensated by CHS to choose whether to be reimbursed as fee-for-service (FFS) providers or as providers employed by or under contract in health care systems. Prohibits health care providers who accept any payment from the system from billing a patient for any covered service, except as authorized by the Commissioner. 27) Allows integrated health care systems to choose to be reimbursed on the basis of a capitated budget, as specified. 28) Requires FFS providers to choose representatives to negotiate rates with the CHS; requires that providers employed by, or under contract with, health care systems be represented by their employers or contractors for rate negotiation with CHS. Requires FFS providers to be paid within 30 business days of filing claims. 29) Requires CHS to set binding rates for providers, if an agreement on provider reimbursement is not reached according to a timetable, as specified. 30) Requires regional planning directors to negotiate operating budgets with regional health care entities. 31) Requires unions representing employees in health care systems to represent the employees in negotiations with the regional planning directors. 32) Requires that compensation for health system employees, which was determined through employer-union negotiations before implementation of this bill, be determined by CHS-union negotiations on implementation. SB 840 Page 7 33) Allows margins generated by health facilities operating under a CHS operating budget, except those margins gained through inappropriate limits on access to care or compromises in the quality of care, to be retained and used to meet the healthcare needs of the population. 34) Directs the Commissioner to establish budgets for prescription drugs and medical equipment, to support research and innovation, and to support training and education of providers. 35) Limits administrative costs on a system-wide basis to 10% of system costs within five years of completing the transition to CHS and to 5% of system costs within 10 years. 36) Requires the Commissioner to adjust CHS budget so that aggregate spending in the state on health care does not exceed spending under this bill by more than 5%. 37) Prohibits a health care provider who accepts any payment under CHS from billing a patient for any covered service. 38) Requires, until the time that the role of all other payers for health care have been terminated, that health care costs be collected from collateral sources when services are provided under a private insurance policy or other collateral source. 39) Defines "collateral sources" to include insurance policies, health plans, employers, employee benefit contracts, government benefit programs, judgments for damages, and any liable third party, and to exclude a federally preempted contract or any service prohibited from subrogation by federal law. CALIFORNIA HEALTHCARE PREMIUM COMMISSION : 40) Establishes CHPC, composed of 21 members, including 11 elected and appointed state officials, three health economists, and seven representatives of business, labor, and non-profit universal health care and taxation policy organizations. 41) Requires the CHPC to develop an equitable and affordable SB 840 Page 8 premium structure that will generate adequate revenue for the Healthcare Fund and ensure stable and actuarially sound funding for the health insurance system that satisfies the following criteria: a) Be means-based and generate adequate revenue to implement this bill; b) To the greatest extent possible, ensure that all income earners and all employers contribute a premium amount that is affordable and that is consistent with existing funding sources for health care in California; c) Maintain the current ratio for aggregate health care contributions among the traditional health care funding sources, including employers, individuals, government, and other sources; d) Provide a fair distribution of monetary savings achieved from the establishment of a universal health care system; e) Coordinate with existing, ongoing funding sources from federal and state programs; f) Be consistent with state and federal requirements governing financial contributions for persons eligible for existing public programs; g) Comply with federal requirements; and, h) Include an exemption for employers and employees who are subject to a collective bargaining agreement and participate in a Taft-Hartley Trust Fund that pays the employer and employee share of the premium to the Healthcare Fund. 42) Requires CHPC, on or before January 1, 2011, to submit a detailed recommendation for a premium structure to the Governor and the Legislature, and, at least 90 days prior to that submission, to make a draft recommendation available for public comment, and requires CHPC to be funded upon an appropriation by the Legislature in the Budget Act of 2009. GOVERNMENT PAYMENTS : SB 840 Page 9 43) Requires the Commissioner to seek necessary approval so that all current federal payments for health care are paid to CHS, which would then assume responsibility for all benefits and services paid by the federal government with those funds. 44) Requires the Commissioner to seek all necessary waivers or agreements so that all current state payments for health care are paid directly to CHS. 45) Requires the Commissioner to establish formulas for equitable contributions to CHS from counties and other local government agencies. 46) Provides that CHS be secondarily responsible for providing care to the extent that the federal, state, or county programs are not transferred to CHS. 47) Requires CHS to incorporate Medi-Cal and Medicare payments, including premiums, copays, and deductibles, to the extent that the Commissioner obtains authorization to do so. 48) Requires the Commissioner to seek all reasonable means to secure a repeal or waiver of any provision of federal law that preempts any part of this bill and, in the event that preemption is not waived, requires the Commissioner to promulgate conforming regulations. 49) Requires employees, to the extent permitted by federal law, entitled to health or related benefits under a contract or plan that, under federal law, preempts provisions of this bill to first seek benefits under that contract or plan before receiving benefits from CHS. Eligibility : 50) Deems all California residents eligible for CHS, and bases residency on physical presence in the state with the intent to reside. 51) States that it is the intent of the Legislature for CHS to provide health care coverage to state residents who are temporarily out of the state. SB 840 Page 10 52) Provides that visitors to the state who receive care under CHS will be billed for all services rendered. 53) Deems individuals who are eligible for health benefits from California employers but working in another jurisdiction to be eligible for benefits under CHS if they make certain payments. 54) Requires that individuals who arrive at a health facility unable to document eligibility because of physical or mental conditions be deemed eligible for services under CHS. 55) Requires the Commissioner to establish an eligibility waiting period and other criteria needed to ensure the fiscal stability of CHS if there is an influx of people into the state for the purposes of receiving medical care. Benefits : 56) Allows any eligible individual to receive services under CHS from any willing professional health care provider. 57) Provides that covered benefits include all care determined to be medically appropriate by the consumer's health care provider. 58) Provides that covered benefits include, but are not limited to, all of the following: a) Inpatient and outpatient health facility services; b) Inpatient and outpatient professional health care provider services by licensed health care professionals; c) Diagnostic imaging, laboratory services, and other diagnostic and evaluative services; d) Durable medical equipment including prosthetics, eyeglasses, and hearing aids and their repair; e) Rehabilitative care; f) Emergency transportation and necessary transportation for health care services for disabled and indigent persons; SB 840 Page 11 g) Language interpretation and translation for health care services; h) Child and adult immunizations and preventive care; i) Health education; j) Hospice care; aa) Home health care; bb) Prescription drugs listed on the formulary; cc) Mental and behavioral health care; dd) Dental care; ee) Podiatric care; ff) Chiropractic care; gg) Acupuncture; hh) Blood and blood products; ii) Emergency care products; jj) Vision care; aaa) Adult day care; bbb) Case management and coordination to ensure services necessary to enable a person to remain in the least restrictive setting; ccc) Substance abuse treatment; ddd) Care of up to 100 days in a skilled nursing facility following hospitalization; eee) Dialysis; fff) Benefits offered by a bona fide church, sect, SB 840 Page 12 denomination, or organization whose principles include healing entirely by prayer or spiritual means; ggg) Chronic disease management; hhh) Family planning services and supplies; and, iii) Early and periodic screening, diagnosis, and treatment, as specified, for persons less than 21 years of age. 59) Permits the Commissioner to expand benefits beyond the minimum outlined above when expansion meets the intent of this bill and can be sufficiently funded; 60) Excludes the following services from coverage by CHS: a) Health care services determined by the Commissioner and chief medical officer to have no medical indication; b) Services primarily for cosmetic purposes, as specified; c) Private rooms in inpatient health facilities; and, d) Services of a provider or facility that is not licensed by the state. 61) Prohibits copayments and deductibles for preventive care or when prohibited by federal law. 62) Makes state residents in a family whose income does not exceed 200% of the federal poverty level (FPL) eligible for no-cost Medi-Cal and entitles them to not less than the full scope of benefits available under the Medi-Cal program, as provided on January 1, 2009. Delivery of care : 63) Allows all licensed and accredited health care providers in the state to participate in CHS. Prohibits a provider from refusing to care for a patient solely on the basis of discrimination that is prohibited by the Fair Employment and Housing Act. SB 840 Page 13 64) Allows individuals to select a primary care provider, and allows women to select an obstetrician-gynecologist in addition to a primary care provider. 65) Requires individuals enrolling in integrated health care systems to retain membership for at least one year after an initial three month evaluation period during which they can withdraw at any time. 66) Requires patients to have a referral from a primary care or emergency care provider, or obstetrician-gynecologist, to see a specialist, but not to see a dentist, or an optometrist or ophthalmologist for a routine vision exam. Permits a patient to see a specialist without a referral if the patient agrees to pay the cost of care, or a copayment, if implemented by the Commissioner. Allows a patient to appeal the denial of a referral through the dispute resolution mechanism established by the Commissioner. 67) Allows a specialist provider to serve as a patient's primary care provider if patient and the specialist provider agree, and the specialist provider agrees to coordinate the patient's care. 68) Permits the Commissioner to establish financial arrangements with medical providers in other states and foreign countries in order to facilitate coverage for California residents who are temporarily out of the state. 69) Permits a patient, during the first six months of CHS operation, to see a specialist provider without referral or copayment, if the patient had been receiving care from that specialist prior to CHS. 70) Assigns the Director of the Office of Health Planning various duties, including establishing performance criteria for health care goals, assisting health care regions in developing operating and capital budgets, and estimating the health care workforce and facilities required to meet the needs of the population. 71) Requires the Office of Health Care Quality to be headed by the chief medical officer and to establish processes for measuring the quality of care delivered in the health SB 840 Page 14 insurance system. 72) Assigns various duties to the chief medical officer, including establishing evidence-based standards of care for CHS and implementing systems to measure quality of care and correct quality of care problems. 73) Requires the patient advocate, in consultation with the chief medical officer, to do all of the following: a) Establish a grievance system; b) Establish an independent medical review system to act as an independent, external process to provide timely examinations of disputed health care services and coverage decisions, as specified; c) Publicize information concerning the rights of enrollees, including the right to request an independent medical review; and, d) Expeditiously review requests for independent medical reviews and to immediately notify enrollees whether the request has been approved. EXISTING LAW does not provide a system of universal health care coverage for California residents. Provides for the creation of various programs to provide health care services to persons who have limited incomes and meet various eligibility requirements. These programs include the Healthy Families Program administered by the Managed Risk Medical Insurance Board, and the Medi-Cal program administered by the Department of Health Care Services. Existing law provides for the regulation of health care service plans by the Department of Managed Health Care and health insurers by the Department of Insurance. FISCAL EFFECT : According to the Assembly Appropriations Committee analysis: 1)Annual California single payer statewide costs would exceed $200 billion, assuming full-year costs starting in fiscal year 2011-12. This figure does not account for spending outside of the system, which would remain authorized under specified circumstances. The system costs are in lieu of current SB 840 Page 15 public, employer, worker, and individual costs. This bill generates these costs by ending the current system of health coverage and providing a broad set of health benefits to all state residents. In order to pay the costs of a single payer system, financing includes a series of taxes, redirection of a variety of current health program funding, and securing state waivers to aggregate federal and local health care funds. 2)Key revenue proposal stalled: SB 1014 (Kuehl), containing key single payer revenue provisions was held in the Senate Revenue & Taxation Committee in 2007. As proposed to be amended in the Senate, SB 1014 includes an 8.17% payroll tax on employers and a 3.78% payroll tax on employees. 3)Cost and revenue estimates: Two California-specific analyses of single payer proposals have been completed in response to SB 840, SB 1014, and a prior version of the author's single payer plan, SB 921 (Kuehl) in the 2004 session. (SB 921 was referred to, but never heard by, this committee.) a) The Lewin Group analysis of SB 921, published in 2005, estimated total expenditures under the single payer program would be $167 billion in 2006 and would increase to $262 billion in 2015. Revenues assumed in the Lewin analysis and later proposed in SB 1014, were payroll taxes of 8.17% (employers) and 3.78% (workers). Key factors that reduce the viability of the Lewin single payer cost and revenue trajectories in the current environment: i) Lewin estimates were largely built in 2004; ii) actual wage expenditure and revenue information has become available; and, iii) health costs have escalated more sharply than assumed in the earlier period. b) The Legislative Analyst's Office (LAO) analysis of single payer impacts was published in June 2008. The LAO reviewed and updated the Lewin analysis with respect to single payer costs and revenues. The LAO estimated annual costs of $210 billion in 2011 growing to $252 billion in 2015. A key difference from the Lewin analysis is that the LAO assumed that Medicare would remain separate from California's single payer system. In contrast, Lewin SB 840 Page 16 assumed Medicare would be folded into California's system. Federal California Medicare spending was $32 billion in 2004, the most recent year for which data is published. The LAO forecast of costs and revenues over the 2011-2015 period shows an estimated annual shortfall, with costs outpacing revenues, of $42 billion in 2011 and $46 billion in 2015. One-half of this shortfall is due to updated medical cost data over the 2006-2011 period. Another 40% of the shortfall is attributed to California-specific and actual wage data, resulting in lower revenues than the Lewin report. The Lewin report relied on national survey data rather than actual California data. The remaining 10% of the shortfall highlighted by the LAO is due to factors such as assuming 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%, combined, for the single payer costs and revenues to balance at the start of the forecast period. These taxes are higher than the 12%, combined, taxation rate proposed in SB 1014. 4)Potential General Fund impacts: There are numerous GF impacts possible under a single payer system. The most significant impact would be if major shortfalls, such as those outlined by the LAO, were to occur. Because a single payer system, established by this bill, is a state-run system, the state GF would be obligated in both short- and long-term scenarios to bolster a system with GF augmentations or loans. Any cost overruns or unpredicted expenses would generate major GF pressures. Additional effects not accounted for in the LAO forecast of specific costs and revenues include the following GF impacts: reductions in tax revenue from insurance companies, economic and labor market disruptions, and one-time implementation costs. Additional revenues that were not included in the LAO forecast are increased tax revenues due to the elimination of many health-related tax deductions leveraged by business and families under current law. SB 840 Page 17 5)Savings and cost avoidance: In addition to the cost and revenue estimates referenced above, research, including both the Lewin and LAO analysis, indicates major reductions in particular types of health spending are likely under a single payer system. Savings include a major reduction in administrative overhead, which is a significant portion of expenditures in the current system. For example, Lewin estimated a $20 billion reduction in overhead related to insurers, hospitals, and physicians. In addition, a single payer system, if implemented effectively with respect to cost control, may provide greater opportunity to stabilize medical inflation compared to our current rate of health care spending growth. COMMENTS : According to the author, this bill is needed because existing law has led to a highly fragmented health insurance and delivery system that is administratively complex and that annually diverts billions of dollars in health care spending from direct health care services to administrative costs and that provides care based on income and insurance status rather than medical need. According to the author, intricate and complicated interactions with public and private health insurance programs, providers, and regulatory agencies are confusing and time-consuming for consumers and providers alike. The author believes that existing law provides no mechanism for stabilizing the growth in health care spending that is quickly outpacing growth in gross domestic product. Absent budgeting capabilities, growth in health care spending is rapidly surpassing our ability to afford current levels of benefits or to add new benefits related to technological improvements. The author notes that health care providers spend increasing amounts of time navigating the porous network of public and private health insurance programs. For example, the University of California - San Francisco Children's Hospital works with nearly 80 different health insurance policies and public programs each with its own benefits package, formulary schedule, and rate of co-payments and deductibles. The author states that 20 to 30% of the health care dollar is spent on administration (excluding profit). Businesses, unions, and other institutions that provide health insurance are particularly harmed under the fragmented system. While health insurance premiums are rising unpredictably, often by as much as SB 840 Page 18 20% in one year, employers, large and small, unions, and even powerful purchasers such as the California Public Employee Retirement System, are no longer able to stabilize health care costs or benefits through negotiations. According to the author, our current system fragments and dilutes the purchasing power of Californians with regard to pharmaceuticals and medical equipment. The author argues we are paying about 50% more than Europeans, Australians, Japanese, and Canadians for the same drugs produced by the same companies. This could be changed if California implemented bulk purchasing of pharmaceuticals and medical equipment under this bill. The author reports that the United States leads the world in health care spending at about $5,000 per person per year on average, more than twice the average in other industrialized countries. Despite our high level of spending, the U.S. ranks 37th in population-based health outcome measurements according to the World Health Organization, well below the rankings of all other industrialized nations. This is true because a large portion of the $5,000 is not going to health services and because nearly 20% of the population has no health insurance. The author believes this bill corrects both of these problems. According to the California HealthCare Foundation, an average of 6.6 million Californians were uninsured over the three year period of 2004-2006. California has the largest number of uninsured residents in the United States and the eighth largest proportion of uninsured in the nation (20.5% of the population). Of the uninsured, 18% were under age 18. Fifty-five percent of Californians have employment based coverage, 16% get coverage through Medicaid, and 9.2% purchase coverage through the individual insurance market. The Foundation also reports that employer-based coverage in California from 1987-2005 declined from 64.6% to 54.7%, with government sponsored coverage increasing from 15.7% to 18.7%, individually purchased coverage increasing from 6.8% to 9.2% and the percentage of uninsured increasing from 17.6% to 21.4%. The California Healthcare Foundation reports the median employer premium contribution in California firms offering coverage in 2005 as a percentage of payroll was 7.7%. Thirty-six percent of the uninsured in California have incomes below $25,000 annually, and 53% of the uninsured have annual SB 840 Page 19 incomes below 200% FPL. Fifty-nine percent of the uninsured are Latino and Latinos are much more likely to be uninsured than any other ethnic group. Supporters of this bill argue that despite incremental reforms enacted over the last decade, it has become clear that our heath care system cannot be fixed using partial measures that do not address its structural problems. Supporters note that six million Californians are uninsured today, most of whom are in working families, and that millions more are underinsured. They cite statistics that half of all bankruptcies in the U.S. are related to medical costs and that three-fourths of those bankrupt families had health insurance coverage at the time they became ill or injured. Supporters believe this bill corrects the underlying problems of inefficiency, waste and partial coverage. According to supporters, all Californians lose when emergency rooms are overcrowded with uninsured patients, when billions of dollars are wasted on administrative costs, and when insurance premiums become unaffordable and benefits are reduced. Supporters argue that we need a health care system that works for everyone, that treats everyone equally, and that provides the security of knowing that no Californian will ever lose their access to health care because they have lost their job, have a pre-existing condition or simply cannot afford it. Supporters contend that long waiting times in Canada reflect differences in per capita spending, not a problem inherent in a single payer system; they report that Canada spends roughly $2,000 per person, while CHS will be funded at approximately $6,000 per person. According to supporters, the single payer system proposed in this bill increases personal choice, because in the current system, patients are limited to lists of providers selected by an insurance company, while CHS allows Californians to choose any licensed primary care provider and dentist. Furthermore, CHS is a not-for-profit system, so "profits" remain within the health system, improving services, research and provider reimbursement. Supporters argue that impartial studies show that California can fully insure all its residents for $8 billion less than what is spent on health care today in the state. Opponents argue that single-payer systems promise but do not guarantee access to those who need it most. They claim statistics from countries that have implemented single-payer SB 840 Page 20 systems underscore the point that when the government funds health care, access is limited by budget constraints and care is therefore rationed. According to statistics cited by opponents: more than 1.3 million Canadians (out of a total population of 26 million) are waiting for medical services, including 212,990 who are waiting for surgical procedures; 45% of Canadians who are waiting for services describe themselves as being in pain; Canadian patients wait an average of six weeks after referral from a primary care physician to see a specialist, and then wait another 7.3 weeks on average before they receive treatment; and, 63% of Canada's x-ray equipment is out of date. Opponents also argue that a danger of single-payer systems is that they tend to delay covering the latest medical technology, often at the expense of patients. According to opponents, when compared with Canada, on a per capita basis, the U.S. has ten times as many MRI units, eleven times as many cardiac catheterization units, and three times as many open-heart surgery units. Opponents report that a recent Canadian Medical Association survey found that 49% of the respondents said they would welcome an approach that would mix private health care into their public health care system. According to opponents, this bill will result in a multi-billion-dollar-tax increase on Californians due to the costs of transitioning to a new system and the ongoing costs, which opponents do not believe will be less than our current system. Opponents believe the bulk of the administrative costs, which proponents of the bill hope to save, will not be eliminated under a single-payer system. These include the costs of claims payment, utilization review, disease and care management programs, the development of drug formularies, and customer service functions, which make up the majority of what is commonly called "administration." Opponents state that none of these functions are wasteful or inefficient and none can be ignored under a single-payer system. Analysis Prepared by : John Gilman/Scott Bain / HEALTH / (916) 319-2097 FN: 0006740