Schwarzenegger, Democratic leaders close to deal on health care reform

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Sacramento, CA — Nine months after unveiling a sweeping plan to bring health care coverage to 6.8 million uninsured Californians, Gov. Arnold Schwarzenegger is close to an agreement with legislative Democratic leadership on a compromise that lawmakers could consider in the coming weeks.

As the talks enter a critical final stage, formal opposition to reforms already outlined by the two sides is almost nonexistent.

Absent from the airwaves are the attack ads from insurance companies and doctor groups that many feared would have materialized by now. Massive protests from labor unions or consumer groups intended to push the talks one direction or another have also been largely put on hold.

Even traditional critics of health care reform have been careful not to speak too harshly or too publicly given the stakes involved.

“I think there’s determination and desire not to lose this opportunity,” said Beth Capell, a lobbyist representing the Service Employees International Union. “I have to give the administration and the legislative leaders credit for keeping the doors open and a flow of information going so that there are
alternatives to open warfare.”

Steve Burd, chief executive of the Safeway grocery chain and a leader of a coalition of big employers who have been pushing for health care reform this year, said there’s been a “sea change” among employers because of rising costs.

“This is consuming so much of the gross domestic product that it runs the risk of us being uncompetitive,” he said.

After hailing 2007 as the year of health care, Schwarzenegger’s reform agenda became mired in a two-month stalemate over the state budget this summer. When the impasse ended, he called a special legislative session earlier this month in hopes of giving his negotiators more time to work out a deal with the Legislature’s Democratic majority.

While the two sides still have a long way to go, there is much that they already agree on.

The governor and Democrats both want a mandate on employers to provide insurance and a requirement that workers share the costs. They also generally agree that insurance providers should be required to accept all applicants and there should be caps on insurer profits.

There is consensus that government programs need to be expanded to cover more of the working poor and that premiums for everyone else should be more affordable.

The big differences are over how to pay for expanding coverage and to what degree Californians should be required to have insurance.

But even if the governor and Democratic leaders agree on a plan, there are challenges ahead. One of Schwarzenegger’s ideas, for instance, is to impose a new tax on doctors and hospitals to help finance coverage for the uninsured. The tax would be offset by an increase in reimbursements for care delivered under government programs, but doctors have opposed the tax.

Still, the California Medical Association remains a player in the talks.

“We’ve stayed at the table all along,” said Dustin Corcoran, a lobbyist for the medical association. “It’s too important for California not to be.”

Art Pulaski, executive secretary-treasurer of the California Labor Federation, AFL-CIO, agreed, but said that one of Schwarzenegger’s ideas — a mandate that all Californians have insurance — could cause them to break away because they believe the financial burden would be too costly for low- and
middle-income families.

“We are so close (to an agreement) on many aspects,” he said. “But there’s just one or two major hurdles around which the whole thing could fall.”

Allan Zaremberg, president of the California Chamber of Commerce, said he’s skeptical that a deal can be reached that will not create a bigger burden for employers. But his group also remains engaged.

“People do not want to keep fighting this forever,” he said. “That’s why you are not seeing anyone saying, we don’t want anything. I don’t think that’s an appropriate response even for people who may be in the crosshairs of this. We just want to make sure it works.”

As proposed, an agreement between the governor and the Democrats — who control both houses of the Legislature — could be passed by a simple majority. A tax component that is also being worked out would likely go on the ballot next fall, rather than to the Legislature, because Republican lawmakers — needed to provide the two-thirds majority required to approve a tax — have already said they would not support the plan.

Thus, keeping the interest groups supportive is critical. The chamber of commerce, for instance, was a major player in the 2004 repeal of a mandate on employers to provide health insurance.

Labor groups have also played key roles in recent ballot measures. The California Teachers Association spent close to $60 million to defeat the governor’s ballot agenda in the 2005 special election.

Health care companies and trade groups are also big spenders. Since 2003, the health care industry has spent $110 million on lobbying at the Capitol, according to the secretary of state.

A recent analysis by the Foundation for Taxpayer and Consumer Rights found that six of the state’s largest insurers and two health insurance trade groups gave more than $4 million to state officeholders since 2001.

Some players are not happy and are not part of the talks. Blue Cross of California, the state’s largest insurer, for instance, has been concerned about the reform proposals since the beginning. Blue Cross spent about $2 million earlier this year on ads raising questions about the process but has not yet
launched clear attacks.

The California Nurses Association is also not supportive and held a noisy rally earlier this month at the Capitol in support of a single-payer system that would replace private insurance with an insurance system run by the state.

Consumer Watchdog
Consumer Watchdog
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