Health spending scheduled for exam

Now that lawmakers have derailed Gov. Arnold Schwarzenegger's plan to overhaul California's health care system, they must grapple with a state budget deficit that threatens to weaken the safety net for the uninsured.

Today, a week after the Senate Health Committee voted down a plan negotiated by Schwarzenegger and Assembly Speaker Fabian Núñez, D-Los Angeles, the governor's proposed cuts to health care will come under scrutiny by the upper house's budget committee.

As part of his effort to eliminate a $14.5 billion budget shortfall, Schwarzenegger has proposed reducing state spending 10 percent across the board, including cutting $4.7 billion from health and social programs and eliminating some services to the state's poorest residents.

Meanwhile, health-care costs are escalating, and the ailing economy is increasing the number of employers that do not offer coverage.

"The status quo is simply unsustainable and unacceptable for all Californians, insured and uninsured alike," Kim Belshé, Schwarzenegger's health secretary, told the Senate health panel last week.

The $14.9 billion Schwarzenegger-Núñez plan would have provided coverage to 3.7 million of the 5.1 million permanently uninsured Californians, according to supporters.

But despite a yearlong campaign by the governor, the proposal received only one vote from the 11-member committee. Members expressed concerns about the plan's funding and the impact it could have on the state budget and current health care system.

"I don't think the status quo is so bad that we need to risk everything we've done to make medicine in California about the highest standard of care in the world," said Sen. Sam Aanestad, R-Penn Valley.

Peter Harbage, a health-care consultant with the New America Foundation, disagrees. "Voting for the status quo (was) akin to choosing to have a weaker health care system," he said.

"Health care is only going to get worse," Harbage said. "Costs are going continue to go up. So are the number of the uninsured."

People with insurance, he said, are already paying a hidden tax that is added to their premiums to pay for uncompensated care that hospital emergency rooms are required to administer.

Harbage said there is also a human toll, citing a recent report by the Institute of Medicine that estimated 3,200 Californians die each year as a direct result of lacking health insurance.

But the Schwarzenegger-Núñez plan to cover more of the state's residents had serious flaws, according to Dr. Sam Nussbaum, chief medical officer of WellPoint Inc., corporate parent of the state's largest health insurer, Blue Cross of California.

"It actually would have had the unintended consequences for many people of making health insurance less affordable," said Nussbaum, citing a provision that would have required insurers to offer coverage to people with pre-existing medical conditions.

Instead of the sweeping plan that died in the Legislature, Nussbaum said, costs could be reduced by covering these people through a combination of public subsidies and private health plans.

"Otherwise, how could we find any rate that could support the coverage of someone who's using $150,000 in drugs or has a child with sustained needs because they're in a neonatal intensive care unit that costs $500,000 a year?" Nussbaum asked.

California's existing public health care system is already fraying. The governor's proposed budget includes a $1 billion in cuts to Medi-Cal, which provides care for nearly 7 million low-income Californians.

The proposal would reduce provider rates, eliminate a variety of services, including dental and optometric, and tighten eligibility requirements.

Doctors note that Medi-Cal's reimbursement rates are among the lowest of any public program in the nation. As a result, only about half the physicians in the state treat Medi-Cal patients, and an increasing number are dropping out of the program.

Reimbursement rates cited by the 35,000-physician California Medical Association include $24 for a primary care visit, $175 to mend a broken arm and $675 for a radical mastectomy.

Dr. Richard Frankenstein, an internist who is president of the CMA, said Medi-Cal rates pay less than what it costs a doctor for office expenses.

"If they reduce the rates by 10 percent, many more doctors are not going to be able to afford to treat these patients," Frankenstein said.

Without a long-term fix, Belshé said, the "budget challenges" that California is facing require "short-term solutions."

"Doing nothing will only increase health care insecurity and the number of the uninsured," she said.

About the writer:

• Call Aurelio Rojas, Bee Capitol Bureau, (916) 326-5545.