San Jose Mercury News

SAN JOSE, Calif: The chief executive of one of California’s largest health insurers unveiled a proposal Tuesday that would provide universal health coverage for every legal resident of the state, one of the strongest signs to date that California’s insurance system is headed for a major overhaul.

The proposal by Bruce Bodaken, CEO and chairman of Blue Shield of California, would use a combination of public and private insurance programs to provide coverage, and would require most employers and individuals to take part. The increased coverage would likely be paid for with new taxes or fees.

It is rare for a private insurer to propose such changes, and health care observers around the state raised questions about Bodaken’s motives. Many said major reforms are years away, and that getting the public to pay for such any such plan won’t be easy.

But the state’s growing health care crisis – fueled by more than six million Californians without insurance – has clearly pushed public and private health care leaders to find alternatives. With Gov. Gray Davis and legislators also looking for options, the state now appears headed for the most significant insurance reform debate seen in the United States in a decade.

“With health care at the crossroads, it’s the right thing to do and the right time to do it,” said Bodaken in a speech at San Francisco’s Commonwealth Club, a public affairs forum. “Health insurance is the key that unlocks the door to the health care system. For too many Americans, that key is missing.”

Bodaken’s proposal left many questions unanswered. It is unclear how the extra public costs of such a plan would be paid for, although Blue Shield will conduct a study into such issues. Right now, undocumented immigrants are not covered by the proposal, but Bodaken said that issue needs to be addressed.

The Blue Shield plan is not the only insurance change being proposed, with state policy makers also floating their own ideas. Lawmakers, doctors groups and advocates for patients, while intrigued by such a move from a major insurer, cautioned that any reforms will need close scrutiny.

“I don’t think it’s new that an insurance company would want everyone in the state to have to buy its product – I’m sure General Motors would love it if every U.S. citizen was required to buy a car,” said Jamie Court, executive director of the Santa Monica-based Foundation for Taxpayer & Consumer Rights. “Without cost efficiency and public control over profiteering, there can be no real universal health care coverage.”

Bodaken’s plan leans heavily on the current linchpin of the health insurance system – employers.

Under the proposal, a group of doctors, state officials and health care industry representatives would first set a minimum level of care for Californians. This “essential benefits package” would include preventive care, doctors services, hospital care and prescription drugs.

Most employers would then be required by the state either to provide essential health benefits for employees or pay into a pool of money that would buy coverage for employees. Only smaller employers would be exempt. Bodaken’s proposal Tuesday did not define how small a company would have to be to qualify for the exemption.

People not covered by employer insurance or other forms of insurance would be required to buy the minimum level of health care coverage. Those who could not afford it would get a state subsidy to cover the cost, or be enrolled in public insurance programs such as Medi-Cal.

Coverage could not be denied because of a patient’s health status. Insurance customers could always choose plans that offer more than the minimum coverage level. Co-payments would remain part of the scheme.

The plan is aimed at getting minimal coverage for the millions of people without insurance, who must now turn to emergency care when health problems arise. About one in five Californians – 6.3 million people – lacked health insurance at some time during 2001, according to the UCLA Center for Health Policy Research. California has long had one of the highest rates of uninsured in the nation.

Economists and health policy analysts expect the problem here will grow even worse, as rising health care costs have prompted more and more employers either to drop health care coverage for their workers or pass more of the cost on to employees. Thousands of people have recently lost their health insurance when they lost their jobs in the ongoing recession.

The growing ranks of the uninsured have pushed the emergency care system into crisis, left hospitals and doctors with enormous unpaid bills, and forced the ensuings costs onto insurers, employers and insured patients.

The resulting financial mess has driven several California managed care companies out of business, such as San Jose-based Lifeguard, which will close at the end of the year.

“The whole system would do better if you didn’t have 6 million people asking for free services,” said Walter Zelman, president and CEO of the California Association of Health Plans. “Many societies with much less wealth than ours have universal coverage. Obviously, it’s not a matter of dollars. It’s a matter of values.”

One state legislator who is also pushing for health care reform said Bodaken’s proposal would be helpful, even if her proposal calls for different changes. State Senator Sheila Kuehl, D-Santa Monica, said “the conversation in California has shifted from whether there should be universal health care to which plan can get us there.”

State lawmakers plan to launch a major push for health insurance reform early next year. Bodaken said Blue Shield is planning to play a role in those efforts, to try overcome the many likely obstacles to any serious change.

“The American public seems to be of two minds,” Bodaken said. Polls show citizens largely support health insurance for everyone. “But when it comes time to foot the bill,” he said, “that support wavers.”

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