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
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|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 |
| | | | |
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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,
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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;
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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
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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
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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
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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.
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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
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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 :
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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.
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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;
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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,
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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.
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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
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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
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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
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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.
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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
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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
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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
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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