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October 21, 2007

State Watch | California Health Care Reform Debate 'Divisive,' USA Today Reports

A proposal by California Gov. Arnold Schwarzenegger (R) that would require all state residents to obtain health insurance has become "increasingly divisive, possibly jeopardizing major health legislation this year and highlighting the difficulties other state or national reform efforts might face," USA Today reports (Appleby, USA Today, 10/17). Schwarzenegger last week introduced a revised $14 billion proposal that would require all state residents to obtain health insurance, through employers, the individual coverage market or public programs.

Under the proposal, the state would subsidize health insurance for individuals with annual incomes less than $25,525 and for families with annual incomes less than $51,625. Lower-income state residents who do not qualify for the subsidies but whose health insurance costs exceed 5% of their household incomes would receive a tax credit. Schwarzenegger said that he would finance the proposal in part through the lease of the state lottery program to a private company (Kaiser Daily Health Policy Report, 10/16).

On Friday, Schwarzenegger vetoed a bill (AB 8) proposed by state Democratic lawmakers that would have required employers to contribute as much as 7.5% of their payroll to cover the cost of health insurance for employees or pay into a state fund that would provide coverage. The legislation would not have required all state residents to obtain health insurance (Kaiser Daily Health Policy Report, 10/15).

Debate Details:

Enactment of the Schwarzenegger proposal would make California the second state after Massachusetts to require residents to obtain health insurance. However, "unlike Massachusetts, where a broad coalition of interest groups won a hard-fought battle for consensus, California lawmakers, the governor, consumer groups and labor unions have not agreed on two key issues: how much employers must pay if they don't offer health insurance to workers; and how much individuals should pay to buy their own coverage," USA Today reports.

Adam Mendelsohn, communications director for Schwarzenegger, said, "Everyone is very disappointed that labor unions have decided to poison the health care debate," adding, "No one is clear why labor unions have gone from sitting at the table and having an honest debate to opposition."

Betsy Imholz, special projects director for Consumers Union, said that the group has concerns about whether the Schwarzenegger proposal is "sustainable for the long term with a low employer contribution." Art Pulaski, head of the California Labor Federation, said, "The governor's proposal says that if you make more than 350% of poverty (about $35,735), there is no support for you whatsoever" (USA Today, 10/17).

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Posted by healthinsurance at October 21, 2007 09:12 PM