California health reform

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National Public Radio (NPR) Morning Edition

BOB EDWARDS, host: California may become the second state in the nation, after Hawaii, to require that employers provide health benefits to their employees. Proponents say it would be the most significant reform in decades, one that could begin a new national debate. If the bill passes today, many expect it to be signed into law by Governor Gray Davis. NPR’s Patricia Neighmond reports.

PATRICIA NEIGHMOND reporting: At first, the new law would apply only to companies with 200 or more employees and wouldn’t go into effect until 2006. The following year, it could be extended to companies with as few as 20 employees. It’s not universal coverage, but it’s a start, says Anthony Wright, director of Health Access, a consumer coalition.

Mr. ANTHONY WRIGHT (Director, Health Access): One million people who are working play by the rules, pay their taxes yet don’t get health care. They will no longer be uninsured and no longer live sicker, die younger, be one emergency away from financial ruin.

NEIGHMOND: Nearly seven million Californians have no health benefits. Under the proposal, if employers don’t provide benefits, they’d have to pay a fee to a state fund that would purchase health insurance for them. There are two reasons why health reform has catapulted to the top of the California agenda. One is the impending recall election. Democrats see this as perhaps their last window of opportunity to enact major health reform, but equally important, some say, is the fact that doctors, hospitals, insurance companies and organized labor have come together over the issue. They all stand to gain something. Doctors and hospitals could get more patients, insurance companies more business and union members more security.

One recent study says the majority of California businesses favor the measure. Most already provide benefits, but Richard Costigan, chief lobbyist for the California Chamber of Commerce, says the proposal would hurt California’s business and the California economy.

Mr. RICHARD COSTIGAN (Lobbyist): If you’re a company looking to expand, you’re not going to do it in California. And if you’re a company looking to leave another state, you’re not going to come into California when you can sell into California from Nevada or Arizona or Utah, because the moment you cross the border, the cost for you, as an employer, go up dramatically.

NEIGHMOND: Costigan says the proposal could cost businesses multibillions of dollars and without increases in revenues, he says, pay raises and even jobs could be lost. Proponents argue the cost burden is less and say the proposal could create a level playing field inside the state because companies that do provide coverage would no longer be at a financial disadvantage. And some
analysts suggest that more states and even the nation could follow California’s lead, which would put all US companies on equal ground. Karen Davis is a health-care economist with the research group The Commonwealth Fund.

Ms. KAREN DAVIS (The Commonwealth Fund): I think it’s important not only for what happens in California, that interesting other states in developing initiatives and shaping a strategy that would work in their state and elevating it to a national debate, which we haven’t had for almost 10 years.

NEIGHMOND: And consumers for the most part are pleased. But Jamie Court, who directs the Foundation for Taxpayer & Consumer Rights, says there’s one huge weakness: The proposal doesn’t include any mechanism to control costs.

Mr. JAMIE COURT (Foundation for Taxpayer & Consumer Rights): It doesn’t have limits on how much premiums an insurer can charge. It doesn’t have limits on how much money a doctor can charge or a hospital can charge. It’s really a power grab that’s going to be good for the public, ultimately, but it needs to include some cost controls on the players in the system so that they can’t just charge anything they want.

NEIGHMOND: If Governor Gray Davis signs the bill, Court expects the next few years before it takes effect will be spent wrangling over how to regulate or not regulate health-care costs. Patricia Neighmond, NPR News, Los Angeles.

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