POST-MORTEM: California health reform

The debate over why health reform failed in California sparked up again following the release of a Field Poll in late April that found that nearly three-quarters of California respondents supported Gov. Arnold Schwarzenegger’s plan.

Following the poll’s release, Schwarzenegger told
the Associated Press he’s not giving up and will push his $14-billion plan forward. Despite his optimism, most
wonks in Sacramento have called it dead at least though 2009.

In a recent column, Sen. Sheila Kuehl, D-Santa Monica, diverts any blame for the reform’s failure from the vehemently opposed single-payer coalition, which she leads from her perch as chair of the all-powerful Senate Health Committee and author of the single-payer bill SB 840. Kuehl blames reform’s failure the governor’s unwillingness to challenge the insurance companies."In fact, the Governor’s plan appropriately fell," Kuehl writes, "because of the Governor’s own reluctance to make the difficult policy decisions necessary for the plan to be in any way affordable to the state as well as to businesses and individuals, but which would have stirred up strong opposition from insurance companies."

Well, not everyone agrees.

SPeter Harbage, a Sacramento consultant and Senior Fellow at the Center for American Progress who worked closely with the governor’s team to craft the reform package, told THCB that the Field Poll confirms Californians support for the governor’s plan and skepticism of "government-run" insurance.

"It’s disappointing that Sen. Kuehl has become so focused on whether or not single payer is ‘winning’ that she seems to have forgotten that all of us are losing under the current system," Harbage said. "We need less political competition and more progress in covering the uninsured and containing skyrocketing prices."


THCB ran several posts on California’s attempt at health reform over the past year. See also this post by analyst Bart Mangoven when the plan was first announced and this post by Brian Klepper predicting the plan’s failure.

Here’s the 108-page Senate Health Committee Analysis of the reform bill.

6 replies »

  1. Peter,
    You write: I can’t see how the “average burden per citizen” is not going to go up with these, “keep paying the bills” plans when the subsidies needed for the uninsured/underinsured will require tax payers to take the hit.
    Year 1 after a UHC plan that redistributes the sources of payments but only keeps the total cost about the same, the average burden per citizen by definition won’t go up, since we have the same number of people and the same total cost. However, the average cost will go up for the middle class and the wealthiest (assuming Democrats are in power and the tax system doesn’t become less progressive), because they are the ones who will be paying additional taxes to fund subsidies for the poor and lower middle class. Conversely, there will be a lower average cost of coverage and care for the poor and lower middle class.
    Since the cost controls that I think are possible in a first iteration UHC plan are modest to minimal, I expect costs to continue to grow at a rate faster than real GDP, though not as fast as in the past. Still, the overall cost burden will increase until real system reform changes incentives, changes the coordination of care, changes rates of pay to reflect affordable budgets, and changes the processes which set standards of care to better incorporate evidence on effectiveness and efficiency (bang for the buck).
    Speaking sarcastically, the nice thing about putting more of a burden on the top 25% of the income scale is that doing so will trigger the Republican machine to finally get more serious about reducing costs. You may be right that this will simply result in greater cost sharing, so that UHC is retained more in word than in deed IF Republicans control the White House and/or Congress. But I think the odds are small that they will control either branch of government in the next 4-6 years.
    Any unsustainable trend will eventually end. The rise of health care costs is such a trend. We both know that simply increasing cost sharing won’t solve the problem of high health care costs. Real delivery system reform will of necessity happen. I think we have to make the bet that when pressure to reduce UHC system costs finally is enough to break through the vested interests within the health care industry, it will take the form of delivery system reform rather than simply more cost sharing.
    The more I look at the economic and political landscape, the more I think that the next 8 years will be quite different from the last 8, or the last 16, or even the last 50, at least when it comes to health care. It’s an exciting time to be in the industry if you have a policy or strategy-related role.

  2. jd, I understand the political reality but voters should understand the overall reality. I can’t see how the “average burden per citizen” is not going to go up with these, “keep paying the bills” plans when the subsidies needed for the uninsured/underinsured will require tax payers to take the hit. How long will the tax payer take the hit – about as long as he’s taking the hit for a failed energy policy with skyrocketing gas prices where the profits go to the oil companies and the Middle East, not to policies that will actually work.
    As for Republicans complaining about high costs to get health costs under control, that won’t result in cost control for their constituents (big pharma, health corps, wealthy), it will result in funding/services cuts for those non Republican constituents that need the help. Look what happened in MedPartD.

  3. Peter,
    Realism is understanding that no plan will pass if it simultaneously provides universal coverage and cuts significantly into the revenues of the providers and suppliers of health care. Those are the folks who consume over 90% of health care dollars.
    I am totally for controlling costs and have all kinds of good ideas for how to do it, like you do. But few if any of those ideas can pass at the same time as a universal health care proposal. In order to get enough allies to pass universal health care, you will need to include most if not all of the health care industry, and in order to do that you can’t take away their gravy train…not right away. Insurers are not your greatest worry if your goal is to reduce health care from 16% of the economy to something close to 10% like the rest of the developed world.
    First get a UHC plan which is a net neutral or slightly better on total health care costs, so that the average burden per citizen doesn’t go up but we can claim that everyone has access to the care they need. THEN, once people see their taxes have been raised, and Republicans go from defending the status quo to complaining about the hight costs that were always there, that’s when you have an opportunity to make real reforms that will reduce the portion of our economy devoted to health care.

  4. “Majorities of voters expressed some concerns with several elements of the health reform plan.
    For example, two in three voters (67%) agreed that the proposed new tax revenues designed to
    help the state pay for the costs of covering more people would not be enough to keep up with
    rising health care costs. In addition, 62% agreed that there were no real guarantees that the
    insurance policies which uninsured, moderate income people would be required to buy would have
    been affordable.”
    It seems at least there is a slight majority of level headed and realistic people who recognize that just cutting the funding pie differently will not control health costs. Whether you fund this by bankrupting individuals or bankrupting tax payers the present system is unsustainable. Single-pay offers both access and price controls – and yes that means challenging the insurance companies.

  5. That poll is very interesting. Only 5% of Democrats were strongly opposed, and yet the plan was sunk by Democratic representatives.