The Daily News of Los Angeles

SACRAMENTO, CA — With soaring health-care costs and a surging number of uninsured, California lawmakers are expected to launch one of the most aggressive efforts in recent years to bring broad reform to the system.

But while there is a vast array of health care proposals to choose from, from liberal Canadian-style government-run plans to conservative market-based approaches, previous reform efforts have struggled.

Experts say next year will bring the same challenges as Gov. Arnold Schwarzenegger and legislators tread a policy minefield in balancing the needs of the state’s uninsured without burdening employers and insurers worried about rising business costs.

“Health reform is so difficult in this country because there’s a lot of different players and a lot of money at stake, and people have different interests,” said Peter Harbage, a Democratic health-care consultant in Sacramento who has advised former Gov. Gray Davis and presidential hopeful John Edwards.

“The governor’s challenge is going to be to decide best how to balance those interests and do something that’s going to be useful to the state.”

The stakes are high, as an estimated 7 million Californians lack any form of health insurance, and those who do have coverage have seen costs spiral at a rate that far exceeds normal inflation.

The first volley in the attack will likely be from Schwarzenegger, who is expected to unveil a health-care reform proposal next month in his State of the State address.

So far, he has been relatively vague about what direction he will take and whether the proposal will be a fully detailed plan or a series of principles to be fleshed out later.

“This year (2007) is the year where Democrats and Republicans are going to work together to fix our health-care problem,” Schwarzenegger said in a recent appearance on NBC’s “Meet the Press.”

“First of all, we have to bring down the health-care costs; we have to make it more affordable to provide health care. No. 2, we’ve got to insure everybody, because we have 6.7 million people that are uninsured.”

Opposition expected

While the governor’s plan remains unclear, there is more certainty in what he is likely to oppose. In the past, he has vetoed a bill that would have created a government-run single-payer universal coverage system, and he opposed a plan to put the burden on employers to expand coverage.

He also has previously opposed various drug discount programs, although he did reach agreement with Democrats on one such program this year.

Still, that is not expected to stop Democrats from reintroducing some of those previous proposals.

Assemblyman Hector de la Torre, D-South Gate, expected to be one of the key players for Assembly Democrats on health care, said it is likely that legislators will introduce many plans, including some previous ones such as universal coverage, individual mandates and employer mandates.

De la Torre is working with Democratic colleagues on his own plan. It’s still in the early stages, but the goal is to expand coverage, improve the rights and flexibility of those who are already insured and contain costs.

He does not expect it to reach as far as universal coverage, but he hopes it would affect more people than the 1 million or so who would have been covered under an earlier employer-mandate proposal that was later repealed.

Democrats, he said, are working on a timeline and plan not to react or modify Schwarzenegger’s proposal, but to come up with their own.

“This is the year where all these ideas are going to be floating around out there,” de la Torre said. “They’re all going to be competing. We’ll see which ones survive at the end of the day.”

Republicans also are not yet ready to define their specific goals or roll out legislation. Most are likely to oppose any plans that seek tax increases to pay for expanded coverage, place disproportionate burdens on business and expand benefits to illegal immigrants.

Republican Leader Assemblyman Michael Villines, R-Clovis, said it will take some time to define and analyze the problem.

Ultimately, he would favor more market-based approaches that offer incentives or create health savings accounts, rather than new taxes or mandates on business.

“I don’t think this is a problem you can (solve) in a year,” Villines said. “You have to slow down, look at the problem, look at the costs, then take the next step.”

One proposal that is likely to be scrutinized is a plan adopted in Massachusetts earlier this year that combines elements, including requiring everyone to buy health insurance or face tax penalties; expanding requirements
on business to provide and pay for coverage; and more government subsidies to help low-income residents.

Some health-care advocates, however, argue the plan would not work in California because the Golden State has nearly twice as many uninsured. Massachusetts also had a pre-existing law that prevents insurers from rejecting coverage for anyone who can afford to pay.

Regulation needed

Santa Monica-based activist group Foundation for Taxpayer and Consumer Rights suggests the government regulate the health insurance industry the same way it regulates auto insurance.

Under such a plan, any increases in premiums would have to be approved by the state insurance commissioner.

“We need to treat health care like we used to treat energy and we currently treat garbage disposal and cable television, we need to regulate it like a utility,” said Jerry Flanagan, an advocate with the foundation.

The insurance industry, he said, is profiting while millions of people can’t afford insurance. Regulating rates would squeeze some of those profits and make insurance more affordable, he said.

But the powerful insurance industry, among the largest contributors to politicians in Sacramento, would of course oppose such a proposal.

And the industry is eyeing all the developments warily.

Chris Ohman, president of the California Association of Health Plans, said that to be successful, any proposal has to address the key issue – the rising cost of providing health care.

Costs on the rise

Rising premiums are just a symptom of the problems that include introduction of new, expensive technology that the insurance industry does not always believe leads to proportionally better health care.

Another is the rising cost of services because of a lack of hospital competition in certain areas, as well as regulatory changes such as new seismic standards and nurse staffing ratios.

A third factor is the increased need for medical services as the baby-boomer generation reaches retirement age.

He suggests California’s first priority should be expanding coverage for some of the 800,000 children who are not currently covered by expanding existing state programs such as Healthy Families and Medi-Cal.

“The first principle we are advocating is: First, do no harm,” Ohman said. “So as we look at potential changes in regulatory policies, make sure we don’t have the bizarre consequence of actually raising costs so that we increase the number of folks that are uninsured.”