Health Care Reforms Back on Governor’s Plate

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SACRAMENTO, CA — Gov. Arnold Schwarzenegger spent more than a year pursuing a radical overhaul of a health care system that leaves millions uninsured and virtually everyone else struggling with ever-growing costs for skimpier coverage.

Today, sweeping health care reform appears all but dead in California. But the state is considering changes to the system that would provide real relief, though only to a small portion of the population.

Bills passed by the Legislature this session and awaiting the governor’s signature or veto take aim at what critics call some of the most egregious, but still relatively rare, practices in the health care system: insurers that cancel a patients’ coverage after they get sick, hospitals and doctors that stick patients with huge bills while they’re haggling with insurers for payment and insurance companies that use customer premiums to pad profit margins instead of to pay for medical care.

Other bills would mandate that all insurance plans cover maternity care and all diagnosable mental illnesses, and boost fines on hospitals and other providers for medical errors. Schwarzenegger has until Tuesday to decide the measures’ fates.

Few expect a renewed push for sweeping health care reform in California soon, even though if anything the problem has grown worse. The state’s fiscal woes threaten to remove hundreds of thousands of children from a state health insurance program and lower reimbursements to doctors who treat the poor.

Still, the next big push for reform is more likely to come in Washington, after the next president takes office.

"People are going to be looking to the new administration and Congress to see what they’re going to do," said E. Richard Brown, director of the UCLA Center for Health Policy Research. "If it doesn’t happen there, the focus might shift back to California.

"This is a big come down from ‘Let’s fix the health care system’ to ‘Let’s fix a handful of problems caused by the health care system,’" Brown added.

One problem that’s received heavy media attention and delivered a black eye to the insurance industry is known in health care speak as "rescissions.” The practice occurs when an insurer retroactively cancels a patient’s policy after the person becomes ill and files claims.

Insurers say the practice is often justified in cases when a patient lied on his or her insurance application, for example, by not disclosing a pre-existing condition. But many unjustified cases have also come to light.

An estimated 4,000 to 6,000 health care rescissions have occurred in California in recent years.

Schwarzenegger highlighted one case in his annual State of the State address this year. He spoke of a 51-year-old San Diego man named Todd who bought an insurance policy on his own, and later developed lymphoma, a form of cancer.

Soon after he was diagnosed, the governor said, the man’s insurance company canceled his coverage. Schwarzenegger said the firm cited a reason unrelated to his illness: that he failed to disclose a prior knee injury on his insurance application. Months later, the man died.

"We are taking action so what happened to Todd will not happen to any other Californian," Schwarzenegger said in his January speech.

But it’s unclear whether the governor will embrace the bill, AB 1945, designed to fix the problem. The measure, sponsored by Assemblyman Hector De La Torre, D-South Gate, says that a policy could be rescinded only if a patient intentionally misrepresented or omitted information on an insurance application. An independent board would have to approve any attempts to rescind coverage.

The proposal has widespread backing among pro-consumer groups that believe the insurance industry has invited such oversight with its own misdeeds. But insurance firms says the bill would force them to prove that someone intentionally lied before they could drop coverage an impossibly high standard in their view.

Another measure takes aim at what critics call the "excessive profits” of insurers. The bill, SB 1440 by Sen. Sheila Kuehl, D-Santa Monica, would require that insurance companies spend 85 percent of revenues from patient premiums on medical care, as opposed to administrative costs and profits. The proposal would also force insurers to disclose, on a plan by plan basis, the percentage of premium dollars going toward health care.

Schwarzenegger included a similar initiative in his health care proposal last year, saying it would boost accountability and rein in costs. But he also emphasized that the proposal was part of a comprehensive reform package, so it remains to be seen whether he will back the idea on its own.

One other high-profile bill is an attempt to prevent situations in which patients get trapped in the middle of billing disputes between health care providers and insurers after, say, a visit to an hospital emergency room that’s not part of the person’s insurance network. The bill, SB 981 by Senate President Pro Tem Don Perata, D-Oakland, would ban a practice called "balance billing" when an emergency room physician seeking payment from an insurer bills the patient in the meantime.

The measure would also set up an independent board to resolve emergency room-insurer billing disputes.

And two other bills, AB 1962 and AB 1887, the latter sponsored by San Jose Democratic Assemblyman Jim Beall, would mandate that all insurance plans cover maternity and mental health services.

"In other years this would be a decent slate of bills," said Anthony Wright, executive director of the pro-consumer group Health Access. "But after having major health care reform on the agenda, it’s incredibly disappointing."

Here are some of the key health care bills on the governor’s desk, awaiting his signature or veto:

AB 1945: Says health care policies can be canceled only if the insurer demonstrates that someone intentionally misrepresented information on his or her application for coverage. Any attempt to rescind coverage would have to go before an independent board for review.

SB 981: Would prohibit emergency room doctors from directly billing patients when they don’t receive payment from an insurance company, a practice known as "balance billing."

SB 1440: Would mandate that insurance companies spend 85 cents of every premium dollar on medical care, as opposed to administration and profits.

AB 1962: Would force all health plans to provide maternity services.

AB 1887: Would require insurance companies to cover all diagnosable mental illnesses.

Sources: Mercury News reporting, Health Access

Contact Mike Zapler at [email protected] or (916) 441-4603.

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