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SACRAMENTO, CA — With a comprehensive health-care reform plan supported by Democratic Assembly Speaker Fabian Nunez and Republican Gov. Arnold Schwarzenegger making its way through the California legislature, health-care watchers are speculating on what the package could mean for reforms in other states — pass or fail.

The sheer size of the most populous state and its political and demographic diversity makes its actions super-sized on the national stage.

If an independent nation, California would have the world’s sixth-largest economy, according to the state’s legislative analyst’s office.

If a California plan passes, elected officials in other states can be expected to jump into the fray. Mohit Ghose, senior vice president of public affairs at America’s Health Insurance Plans, estimated that more than two dozen
states may consider significant health-care legislation this year. Mississippi and Indiana recently announced proposals to cover uninsured residents.

Jennifer Hillert, a director of state affairs for the National Association of Health Underwriters, said Washington, Georgia and Utah are among the states to watch should the California plan pass. The 2008 elections — both competitive statewide races and the presidential race — could serve as a check on actually getting proposals enacted into law by the end of the year. But state officials are no longer content to wait for a federal solution, she said.

“A lot of states are tired of waiting and they’re ready to take things into their own hands,” Hillert said.

In California, the Senate Health Committee has scheduled a Jan. 16 hearing on AB 1X, the Health Care Security and Cost Reduction Act. The $14.4 billion package would require all California residents to have health insurance by 2010, with subsidies and tax credits for lower-income residents. It provides for an individual mandate, coverage of pre-existing conditions and coverage for all children. The Assembly approved the bill in December. Should the bill clear the Senate, California voters would vote on the funding in a Nov. 4 referendum (BestWire, Jan. 8, 2008).

“California is an important experiment to see what can be done,” said Ghose, whose association includes nearly 1,300 health insurers. “The important thing about California is there is an effort being undertaken on a massive scale.”

That’s what makes Douglas Heller, executive director of the California-based Foundation for Taxpayer and Consumer Rights, nervous. His organization favors a single-payer plan and eyes the California shared-responsibility approach as “a punitive approach to health care that’s a giveaway to the insurance companies” that puts the burden on middle-class consumers.

“That’s why we want so badly for California to get it right. Massachusetts may be looked at as a testing ground. California is more of a trendsetter,” Heller said. “The nation looks to California.”

In April 2006, then-Massachusetts Gov. Mitt Romney, now running for U.S. president, signed health-care reform into law. It included an individual mandate requiring everyone 18 or older to buy health insurance or face financial penalties. According to the state, about 293,000 people enrolled in health insurance through early December 2007. In figures the state released Dec. 5, 63,000 of them had enrolled in private, unsubsidized health plans (BestWire, Dec. 6, 2007).

“Massachusetts is showing how difficult it is to get this done the right way,” Ghose said.

The Service Employees International Union, the largest U.S. health-care labor union, broke with some labor groups promoting a single-payer plan to endorse the Schwarzenegger-Nunez California bill. The union said it saw a historic opportunity for reform in California and chose to be a leader in forging a compromise.

“If we can get this done here, it will create a wave of activity, probably at all levels — in other states and hopefully in Congress,” said Jeanine Meyer Rodriguez, spokeswoman for the SEIU California State Council

If the California plan fails, “We’re just going to start again,” Rodriguez said.

The California bill incorporates a system of shared responsibility between employers, health-care providers, consumers and government. It requires an individual mandate for most Californians, but provides subsidies for those earning up to 400% of the federal poverty line. The bill includes cost-containment and transparency language, including a requirement that insurance companies spend no more than 15 cents of every dollar on administrative costs. Financing includes a tobacco tax, an employer fee based on a sliding scale of annual payroll, a hospital fee and a county share of the cost (BestWire, Jan. 8, 2008).

Alan Katz, vice president of public affairs for the California Association of Health Underwriters, said a victory for the California plan would reinforce the need to take a bipartisan approach. “You can’t enact health-care reform that’s going to punish one side of the equation,” he said.

“If the law dies in the State Senate, I think it will reinforce how difficult it is to pass health-care reform on the state level. California’s failure to pass a bill shouldn’t discourage other states from trying to find a solution, but it will add to the pressure on Congress and the White House to make health-care reform a top priority in 2009,” Katz said.

If it passes in California, likely legal challenges could keep implementation tied up for months or years, Katz and others warned.

“My sense is by the time they get done with the courts, President Obama will be signing health-care legislation and it will pre-empt California, so none of this will matter,” Katz said, laughing.
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