May 15, 2007

Legislators show details on health proposals

The health plans proposed by Assembly Speaker Fabian Nunez and Senate Leader Don Perata would both require employers to pay 7.5 percent of their payroll for health insurance or else pay a fee to the state to cover the uninsured, according to an economic analysis the leaders released today.

I attended a staff briefing on the subject this morning and came away with the conclusion that the chances for a megadeal on health care are probably a bit better than conventional wisdom around the Capitol would suggest. At this point the deal I can envision does not include Republican lawmakers. Just the governor and the Democrats. But I don’t think such a bargain is all that unlikely.

Consider the points of difference, and agreement:

The Democrats want a pay or play system with a 7.5 percent payroll tax. The governor wants a pay or play system with a 4 percent payroll tax.

The governor wants an individual mandate that covers everyone. The Democrats now say they favor an individual mandate for employees. Employers would have to offer care or pay into the pool, and either way, employees would have their share of the premium deducted directly from their paychecks. No need to send the tax collectors after them. We’ve already got their money.

The Perata plan also has an individual mandate for those over 400 percent of poverty. Both Democratic plans do not cover undocumented adults, the self-employed or the early retired or unemployed unless they qualify for Medi-Cal. That’s about 1.7 million people. Some of them could be brought into the system if the Democrats agreed to a universal individual mandate, but they say they’d want subsidies for many of those people before they’d do so.

The governor wants to tax doctors at 2 percent of their revenue and hospitals at 4 percent as a way to generate money to match an increase in federal funding that would go for boosting Medi-Cal reimbursement rates and expanding access to care. The Democrats say they would love to do that but think the provider fees are either unworkable or undoable politically.

The governor wants to require insurance companies to cover everyone who applies, regardless of pre-existing conditions. Perata does too, though his requirement would probably be phased in more slowly and is linked to his partial individual mandate. Nunez does not propose guaranteed issue but wants to tinker with insurance regulations to give high-risk cases more options.

None of these differences seem insurmountable. I also still think there is a chance that the deal closer could be a tax that gets away from the employer mandate, which is questionable under federal law, and moves to a broader funding source, either a straight payroll tax on everyone, or a sales tax increase. If it were a sales tax increase, employers would probably support it. In that case the problem might be organized labor, which dearly wants a government mandate requiring employers to provide insurance so that the issue is no longer left to the bargaining table.

In the end, the biggest difference between the Democrats and the governor is, oddly enough, is desire to do more. He wants to cover everyone but undocumented adults. They are willing to leave the self-employed and early retirees out, as well as illegal immigrants. Are these constituencies so powerful that the Democrats will maintain their opposition to a mandate to protect them? That seems unlikely. Some kind of mandate-lite, with limits on how much people would have to spend, seems possible.

Finally, as I have said in the past, I still believe it is possible that the Democrats and the governor will decide to take a consensus plan to the voters, and they will either qualify it by initiative or pass it with a majority vote in the Legislature and place it on the ballot. Some folks say they can't do that. But I don't see anything in the constitution that prohibits it.

Posted by dweintraub on May 15, 2007 2:27 PM