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February 28, 2008

Bills aim at insurers after health care reform in California collapses

With health care reform dead in California - at least on the grand scale that Gov. Arnold Schwarzenegger envisioned - lawmakers are stepping in with a series of measures they say would help consumers and ban some egregious practices by insurance companies.

The bills fall far short of the governor's vision of sweeping reform, which collapsed last month under the weight of a nearly $15 billion price tag. And they would do little, if anything, to reduce the ranks of the roughly 6.5 million uninsured.

But short of that, supporters say the state can use its regulatory heft to aid consumers and possibly rein in rising health care costs. The measures, they say, would lay the groundwork for the next major reform push, possibly in 2010.

Lawmakers are "looking for an easy path to do something positive that won't cost money that the state doesn't have," said E. Richard Brown, director of the University of California-Los Angeles Center for Health Policy Research. The state has a projected budget shortfall of roughly $8 billion.

One bill is meant to help guide anyone trying to make sense of the dizzying combinations of deductibles, co-pays and premiums in choosing a health plan. The measure, SB 1522, sponsored by Sen. Darrell Steinberg, D-Sacramento, would simplify the process. Insurers would have to offer five "benchmark" plans, with easy-to-follow benefits and costs, so a person could make "apples-to-apples" comparisons from one insurance company to the next.

In a similar vein, Assemblyman Felipe Fuentes, D-Arleta, has a bill to help people measure what they're getting in return for hefty hospital and doctor bills. The bill, AB 2967, would create a "transparency" committee that would collect medical data to gauge the performance of hospitals and doctors treating certain illnesses, relative to what they charge.

At least three bills target a practice that's received widespread attention in recent months - insurance companies that retroactively cancel a patient's insurance coverage, often only after the person gets sick. Some insurers have defended so-called "rescissions" by claiming that patients lied about their health condition in their applications.

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Posted by healthinsurance at 02:41 PM | Comments (0)

February 26, 2008

California Health Plans Pay $65 Million to Improve Performance in Patient Care

Physician Groups Rewarded for Achieving Pay for Performance Measurements with Payments That Exceed Prior Year by More Than $10 Million.

Pay for performance (P4P) bonus payouts from health plans to California physician groups to reward quality of patient care totaled $65 million in 2007, according to the Integrated Healthcare Association (IHA). The payments were distributed during the third and fourth quarters of 2007 based upon the 2006 performance of physician groups serving HMO members. Aetna, Blue Cross of California, Blue Shield of California, CIGNA HealthCare, Health Net, PacifiCare, and Western Health Advantage participated in the performance payments with each health plan determining its own budget and methodology for calculating bonus payments to the physician groups.

These health plans have distributed over $210 million in payments to physician groups as a result of meeting P4P quality measures in the first four years of the program. The total financial payout equates to about 2 percent of the overall reimbursement to physician groups annually. Payments to individual groups vary from no payments to payments equaling up to 5 percent of overall reimbursement based upon performance.

Payments are typically paid on how well a physician group performs versus its peers, but emphasis is also placed on groups that show significant improvement over prior years. Participating health plans have been encouraged to allocate 20 percent of 2008 bonus payments for physician groups that make the most significant improvements.

Another incentive to promote improved physician group performance involves public reporting of results. Annually the results for each performance measure are reported by physician group on a website managed by the California Office of the Patient Advocate (OPA).

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Posted by healthinsurance at 09:50 PM | Comments (0)

February 24, 2008

Blue Cross of California Responds to Recent Media Coverage of Rescission

-- Blue Cross of California is committed to being the industry leader when it comes to protecting those seeking health insurance. That's why in September of 2006, Blue Cross was the first health care insurer in California to implement a series of steps to strengthen and make more transparent our process for rescinding policies in order to further minimize the possibility of errors.

These initiatives included:
-- Creating a new simplified application for individual benefits policies
-- Revising policies to clarify the initial underwriting process
-- Forming a new committee structure for the rescission review process
-- Adding dedicated liaisons for members undergoing retrospective review
or who have had their policies rescinded
-- Revising documentation to improve the accuracy and consistency of
review processes
-- Enhancing training programs for the underwriting and the retrospective
review process

In addition to these steps, for the past several weeks Blue Cross of California has been in the process of developing an outside third-party review process for all rescission cases. This means an independent, outside agent will help us validate whether rescission of a member's benefits is warranted. Blue Cross will be bound by the decision of the third-party reviewer. As the market leader in California, this practice is intended to further our efforts to protect all health care consumers.

Rescission, a tool designed to protect the system from abuse, affects a very small percentage of new enrollments -- roughly one-half of one-percent out of 300,000 new applicants a year. Blue Cross takes the issue of rescission very seriously, and we are leading the industry in working with legislators, regulators, providers and our members to help improve the access to health care for all Californians.

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Posted by healthinsurance at 07:00 PM | Comments (0)

February 23, 2008

California act to protect individual health insurance coverage

Lawmakers in several states are limiting insurers' ability to cancel health policies for consumers who buy their own coverage.

The state actions come as more people buy individual insurance policies because they are self-employed, unemployed or don't get coverage at work. More than 18 million people have individual coverage.

Unlike group health insurance policies offered by employers, individual plans require applicants to submit many years' worth of detailed medical information. The insurers use that information in deciding whether to offer coverage and how much to charge.

Most states allow insurers to revoke an individual policy — generally within two years of granting it — if they find an applicant lied or inadvertently omitted information on an application.

Cancellation of a policy is retroactive. Patients must pay for all their past medical care, even if the insurer previously approved and paid for the care. There is little nationwide data on the extent of cancellations. Blue Cross of California has said it cancels fewer than one-half of 1% of all new policies, an average of 1,000 a year.

Prompted by numerous consumer complaints and lawsuits against insurers, state lawmakers are taking action. Among their efforts:

•New Mexico. The Legislature this month passed bills requiring insurers to show that applicants deliberately gave incorrect information on an application. Current law allows cancellation if the error or omission was inadvertent. The governor has not said whether he will sign the bills, says spokeswoman Caitlin Kelleher. Without the law, "the consumer has no ability to defend" against a cancellation, says Melinda Silver, attorney with the state's Managed Health Care Bureau.

•Connecticut. In October, a new law took effect requiring approval from the state insurance commissioner before an insurer can cancel an existing policy.

•California. Legislation introduced last week would require insurers who want to cancel a policy to first win approval from the state's Department of Managed Health Care. Last year, legislators adopted a law requiring insurers to pay for any medical treatment they approve, even if they later cancel the policy.

California state regulators have announced cancellation-related fines against some insurers, including Blue Cross, Kaiser Permanente and Blue Shield of California.

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Posted by healthinsurance at 06:37 PM | Comments (0)

February 21, 2008

Los Angeles Launches Action Against California Health Insurer

The Los Angeles city attorney launched a wide-ranging legal action on Thursday against one of California’s biggest health insurance providers, accusing it of illegally selling policies to customers and then denying them coverage when they fell ill.

The action is being launched as health insurers face closer scrutiny from US regulators and legislators. Health insurance has become one of the dominant themes of the presidential election, with Democratic challengers Hillary Clinton and Barack Obama promising to reform what they contend is a broken system.

Rocky Delgadillo, the Los Angeles city attorney, accused Health Net of defrauding customers by setting illegal policy cancellation targets for its sales agents, who rarely possessed any medical training.

Mr Delgadillo said 1,600 Health Net customers had policies cancelled illegally. Damages of $2,500 (€1,700, £1,275) per customer are being sought. But the final damages tally could be much higher as Health Net is also held responsible for illegally advertising its products to thousands more customers.

The company is accused of “unlawful, unfair and fraudulent business acts and practices and deceptive advertising”. In addition, Mr Delgadillo said the company created a “secret unit” responsible for cancelling policies.

More than $35m of claims for medical treatment had been denied, he said, adding that customers were often in a vulnerable position when they discovered they were not covered with health insurance. “Just imagine . . . you’re in a hospital bed awaiting treatment and you find that Health Net will not provide the coverage you have paid for,” he said.

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Posted by healthinsurance at 02:37 PM | Comments (0)

February 19, 2008

Candidates' health plans duck some key questions

Democratic presidential candidates Hillary Clinton and Barack Obama are sparring over which of them is more electable, whether change is better than experience, and how the party's "super delegates" should vote.

What they are not doing as much of is debating issues. That's because on most policy matters, beyond the backward-looking debate over invading Iraq, there's little daylight between them.

The notable exception is health care. Both candidates say they favor universal coverage, a worthy goal in a country where 44 million people are uninsured. Their big difference is whether uncovered individuals should be required to buy health insurance. Clinton says yes, that anything less is unsatisfactory. Obama would require only that all children be covered. Adults will buy health insurance, he says, if given incentives, a questionable assertion.

Clinton's broader mandate (with government subsidies for the poor) would get the nation closer to the goal of universal health care coverage and would spread the cost over a larger pool of individuals, both good objectives. Further, it would do more to reduce the hidden tax on insured people, estimated at more than $1,000 a family, to pay for the health care of those who don't have insurance and show up at hospital emergency rooms.

But for voters, this narrow policy difference provides little basis for a judgment. That is because both plans are sketchy and incomplete, making the mandate on individual coverage kind of like a loose piece on a giant puzzle. Without seeing how it would fit with all the other pieces, it is difficult to make an informed decision.

Both Democrats' health care plans are more ambitious than that of presumptive Republican presidential nominee John McCain, who proposes much more modest adjustments to the health care system, centered on tax changes to encourage consumers to take a more active role in choosing, and paying for, their health coverage. Even so, Clinton and Obama are heavy on promises about making insurance affordable and available, and light on the more painful details. Neither says, for example, how he or she would enforce the individual mandates (Clinton's for everyone, Obama's just for those 18 and under). Would they garnish people's wages? Deny them access to health care? Shrug and look the other way?

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Posted by healthinsurance at 11:20 AM | Comments (0)

February 17, 2008

Bill Targets California Health Insurance Cancellations

Spurred by complaints that Blue Cross of California and other health insurers cancel patients' policies after they get sick, a Southland lawmaker has introduced legislation that would require state regulators to sign off before carriers drop policyholders for allegedly failing to disclose preexisting medical conditions.

Assemblyman Hector De La Torre (D-South Gate) said his bill was prompted by recent letters from Blue Cross to physicians asking them about new patients' health issues that could be used as a reason for canceling insurance coverage.

De La Torre said his bill was needed because insurance companies "were not intending to abide by the spirit" of a law he wrote last year prohibiting carriers from refusing to pay medical bills for previously authorized services.

"We all agree that if someone is lying and doing willful misrepresentation, then they should not be insured," the assemblyman said. "But the insurance companies should not be taking premium dollars from someone and dumping them."

Health insurance companies contend that weeding out people who may not have been forthright when they applied for coverage is an essential part of keeping treatment costs under control.

"We need to make sure that the process for application, rescission and cancellation is fair," said Christopher Ohman, chief executive of the California Assn. of Health Plans. "But we also want to make sure that the millions of people who do the right thing aren't left paying for the relatively few who don't."

Ohman's association represents 40 health maintenance organizations and preferred provider organizations covering 21 million enrollees in California.

Ohman said his group's members were "analyzing the implications" of De La Torre's bill.

The assemblyman's bill is the latest in a series of legislative, regulatory and legal actions in California in response to aggressive efforts by insurers and health maintenance organizations to drop patients who hold individual policies after they've filed claims.

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Posted by healthinsurance at 06:41 PM | Comments (0)

February 14, 2008

Study shows Latinos willing to pay for cross-border California health insurance

Research out of UC Berkeley points to cross-border health insurance as a way to expand health coverage to Mexican immigrants living in the United States, and a county health staffer plans to learn more about it.

The study, by Arturo Vargas Bustamante, a doctoral candidate at UC Berkeley, found:

• 62 percent of Mexican immigrants surveyed said they would support a cross-border insurance plan.

• 57 percent said they'd pay $75-$125 per month if services in Mexico were provided in public hospitals.

• Mexican immigrants in the U.S. sent $20 billion to their relatives back home in 2005, primarily to help cover family health care expenses.

• Those who sent money for family health care expenses strongly supported cross-border insurance.

The study was released as the Pew Research Center unveiled projections that Latino population in America would more than double from 14 percent in 2005 to 29 percent by 2050.

"The Mexican-born population in the U.S. has the lowest share of health insurance coverage than any other foreign-born group," said Gil Ojeda, director of UC Berkeley's California Program on Access to Care and Health Initiative of the Americas, which co-funded the study.

California is the only state to offer cross-border health insurance.

About 50,000 Mexican immigrants living between Los Angeles and San Diego are enrolled, a small percentage of the estimated 11 million Mexican immigrants who live or work in the U.S.

Carmen Robles, a senior health analyst for Santa Cruz County, said she plans to attend a conference Feb. 28-29 in Berkeley where the cross-border approach will be discussed.

Dr. Jose Chibras of Salud Para la Gente, which treats many Latino families in Watsonville, said he was not familiar with the existing cross-border health insurance program. He had a lot of questions.

"Who's going to pay for it?" he asked. "What would the reimbursements be for the physicians? What does it cover? What could a person actually get for that amount of money? Are the patients able to afford $150 a month? That is a lot of money to put out, $1,500-$1,600 a year. And who would be eligible?"

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Posted by healthinsurance at 08:23 PM | Comments (0)

February 13, 2008

California Health-care solution

Since many conservative politicians oppose universal health care because they feel it takes away patients’ right to choose where to get their health insurance, wouldn’t it make sense for the government to adopt a system that promotes public-private competition?

In his book The Conscience of a Liberal, Paul Krugman, opinion columnist for The New York Times and economic teacher at Princeton University, advocates for a health-care system that gives people the choice to either buy into a Medicare-type government insurance plan or stick with their private insurance companies.

Wouldn’t this be a logical compromise that could be made between conservatives and liberals?

It would provide health care to all Americans without taking away a person’s right to choose where to get their health insurance.

Health care reform plans similar to the one envisioned by Krugman have been proposed at the national level by Sen. Barack Obama and at the state level by California Gov. Arnold Schwarzenegger.

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Posted by healthinsurance at 07:19 PM | Comments (0)

February 12, 2008

New Study on Individual California Health Insurance Mandates

Behind the escalating debate on the health care between Senators Hillary Clinton and Barack Obama on individual mandate – she’s for it, he’s against it – is a critical policy battle that not only cuts across healthcare reform but also the neo-liberal privatization dreams, the home mortgage crisis, and the recession that is no longer looming, it’s here.

Sound farfetched? Take a closer look, starting with the millions of Americans staring at the loss of their homes due to the subprime loan debacle. It’s not a loan or a mortgage crisis for those families; it’s a debt crisis being forced upon them by the banks, hedge funds, and some California insurers who are desperate to shift their own mammoth debt onto someone else.

Banking, other financial institutions, insurance and real estate which make up the finance sector, now account for about half of U.S. corporate profits. And, they are in trouble with more than $2.5 trillion in outstanding consumer credit, $800 billion of that in credit card debt, and another $10.1 trillion in domestic mortgage debt.

Being thrifty won’t solve that problem. The financial planners have identified two lucrative pots of money. Trading carbon credits for industries and employers that want to brand themselves as green while continuing to pollute. And, making a killing in healthcare premiums, currently 16 percent of our national economic pie and rapidly growing.

The banks are already into healthcare in a big way, serving as a repository for health savings accounts and other tax credit schemes so beloved by the Bush administration and the Republican presidential candidates. But the financiers would like more.

Enter the neo-liberal think tanks and policy wonks and plans they hawk to expand the reach of the market, especially the financial market, in health care. Central to that approach is shotgun insurance, forcing everyone not currently covered to buy health insurance policies.

Compelling people to buy insurance, however, is not the easiest sell. Big insurers and HMOs have a well deserved bad reputation for heartless denials of care – that’s how they make money. And, it’s pricey. Premiums the past decade have gone up 87 percent, not to mention the ever climbing bills for insurance deductibles, co-pays, and a host of other transaction fees.

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Posted by healthinsurance at 02:08 PM | Comments (0)

February 11, 2008

Challenges Loom for Childrens' Health Insurance in California

Since President Bush did not renew the State Children's Health Insurance Program, or S-CHIP, California is grappling with the future of its version of the program that covers more than 900,000 kids. But many people don't realize the other looming challenge of getting health insurance for low-income children. From Sacramento Kelley Weiss explains.

This time California health officials are bracing for a federal law that will take effect in August. The law will cut back how much money a family can make to qualify. Bonnie Ferreira is with Cover the Kids. Her program, based in Sacramento, picks up children who don't qualify for Medicaid or Health Families, the state version of SCHIP. Right now there are 10,000 enrolled in Cover the Kids. Ferreira says she's worried that the new law will further strain the health care system.

Ferreira: Our local communities cannot afford to have all these kids uninsured. Where do they show up? They show up in high cost care, they show up in emergency rooms.

Dr. Patricia Samuelson works at the Norwood Clinic in Sacramento. In her practice, she sees a lot of kids without health insurance. She says the national veto and upcoming law could affect more than emergency rooms.

Samuelson: When your children don't have any medical insurance there are parents who don't let them play, don't let them ride their bikes for fear of injury.

But, some health officials say it could be worse.

Spingarn: I don't think anyone really believes at this point that there's going to be no federal funds and no state funds for this program in the future.

That's Ronald Spingarn with California's Managed Risk Medical Insurance Board that oversees Healthy Families. The good news, he says, is even with the national uncertainties California plans to add more than 65,000 kids to the program.

He also says the feds will give California money until September. But, from September to March 2009, when SCHIP is slated to end, he says there are no funding guarantees. So, while there are different predictions on just how SCHIP changes will impact California, officials agree it's a 'wait and see' scenario.

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Posted by healthinsurance at 12:51 PM | Comments (0)

February 09, 2008

Growing Pains of Universal Coverage for Californians

It has not been a good few weeks for state efforts to provide universal health insurance. A pioneering program in Massachusetts to cover hundreds of thousands of uninsured has cost a lot more in its opening phases than originally projected, raising fears about its sustainability. An even more ambitious proposal to cover millions of uninsured in California collapsed in the State Senate over fears that it would prove unaffordable.

Neither setback means that states should stop trying to cover the uninsured — especially since the federal government is AWOL. The problems do suggest that officials need to make the most realistic possible cost estimates and be prepared to provide resources to subsidize coverage for those who can’t afford it.

The Massachusetts plan was the result of compromises between a former Republican governor — Mitt Romney, who lost his enthusiasm just in time for the presidential primaries — and a Democratic Legislature. It required all residents to buy health insurance or suffer financial penalties, subsidized those unable to afford it, imposed a small fee on businesses that failed to provide employee coverage and set up a marketplace where people can buy portable insurance with pretax dollars.

The financial problems are mostly because of underestimating the number of uninsured and the rate at which they would sign up for subsidized coverage. As a result, the state, which had originally expected to spend $472 million on subsidized insurance this fiscal year, now expects to spend about $150 million more than that. It anticipates spending almost $870 million next year.

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Posted by healthinsurance at 07:20 PM | Comments (0)

February 07, 2008

Schwarzenegger vows to pursue health insurance

California Gov. Arnold Schwarzenegger on Tuesday vowed to press on with legislation to provide health insurance to his state's uninsured, a day after a universal health care bill he backed died in a Senate committee.

"I'm as determined as ever," Schwarzenegger said.

Lawmakers who voted against the bill missed a golden opportunity for California to demonstrate to the rest of the United States how to establish a universal health care system, Schwarzenegger said in a speech to the press club of the state capital of Sacramento.

"The issue is not going to go away," he said.

The Republican governor and Assembly Speaker Fabian Nunez had brokered a bill that would have provided Californians without medical insurance some level of coverage by requiring they obtain it individually or through employers or a state program.

The Democrat-led Assembly had endorsed the legislation but on Monday the health committee of the Democrat-led Senate voted it down 7-1.

Top Democrats in the Senate had joined with the chamber's minority Republicans in opposition to the legislation's complexity and projected cost, expected to be more than $14 billion to help establish a fund to subsidize medical insurance for more than 5 million uninsured Californians.

The fund would have relied on tobacco taxes and fees on employers and hospitals. Opposition to the bill grew after a report last week by the state's budget watchdog warned the insurance scheme could cost the already cash-strapped state much more than supporters claimed.

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Posted by healthinsurance at 08:27 PM | Comments (0)

February 06, 2008

Clinton's health-care insurance plan might garnish paychecks

Democratic presidential candidate Hillary Clinton said workers' wages might be garnished to pay for health insurance under her health-care plan.

"We will have an enforcement mechanism," Clinton said today on ABC's "This Week" program. The New York senator said possibilities include paying for the program through the tax system and automatic enrollments, as well as "going after people's wages." Clinton said her plan would "enable everyone to afford" coverage.

Clinton has attacked Barack Obama for promoting a health plan that doesn't require universal coverage and portrayed herself as the Democrat with the best chance to win the presidency, as part of her closing arguments before primary and caucus voting in 22 states on Feb. 5.

"It would be a big mistake for Democrats to nominate someone who's already conceded on the issue of universal health care," she told reporters on her campaign plane while traveling to Arizona from California yesterday. "My strong advocacy for universal health care puts me in a much better position to take on John McCain."

Illinois Senator Obama has focused on lowering the cost of health care and opposes forcing Americans to pay for health insurance, saying that some people still wouldn't be able to afford it and mandates in states such as California and Massachusetts show that it doesn't work.

Clinton, 60, is seeking to sharpen distinctions with Obama before the "Super Tuesday" Democratic nominating contests this week. She said voters should look beyond the choice of the first woman or black to be elected president.

"Whichever one of us emerges, we will make history," Clinton told a few thousand voters yesterday during a rally at California State University in Los Angeles. "It's not just about making history in a symbolic way, it is about changing lives for the better."

Clinton and Obama, the two leading candidates for the Democratic nomination, are crisscrossing the nation ahead of Super Tuesday, when voters in states including New York, Massachusetts and Georgia will choose about half the delegates needed for the nomination.

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Posted by healthinsurance at 05:20 PM | Comments (0)

February 04, 2008

California's reform fails; can a federal solution work?

The demise of California's attempt at comprehensive health-care reform last week means that advocates of overhauling the health-care system will turn their focus back to Washington, several experts said, as an increasingly tough budget climate raises new questions about whether states can go it alone.

When the plan championed by Gov. Arnold Schwarzenegger, a Republican, and state Assembly Speaker Fabian Núñez, a Democrat, went down to defeat in a legislative committee, so did hopes that successful reform in such a populous, influential state would bolster efforts elsewhere to cover more of the nation's 47 million uninsured.

While California is unique in some respects -- it has a diverse electorate, a high number of uninsured and a history of occasional budget crises -- experts said some of the same economic forces at work there threaten to slow or swamp similar proposals in other states. The slumping economy diminishes states' tax revenue at the same time that spending demands increase as more people seek help from programs such as Medicaid, which serves the poor. And, unlike the federal government, state governments have to balance their budgets.

"The failure of California's plan pushes the focus about expanding coverage even more strongly towards Washington," said Paul B. Ginsburg of the Center for Studying Health System Change, a nonpartisan policy-research group. "I've never believed that states would be able to go very far on their own because of their fiscal limitations. A state in an average year could be able to afford something, but once they get into a recession, they get into fiscal trouble."

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Posted by healthinsurance at 07:14 PM | Comments (0)

February 03, 2008

California health care dream gets a lethal shot of budget reality

A year ago, Gov. Arnold Schwarzenegger set out to show the nation that California could do what the federal government and many states could not: transform a health care system that leaves millions uninsured and countless others paying ever more for skimpier benefits.

That dream died Monday in a Senate committee, falling victim to a faltering economy and leaving reformers to wonder whether a historic opening was squandered. With the governor and lawmakers now focused on the state's budget woes, the next chance may be at least a year away, after the next president is inaugurated.

"California had a major opportunity," said Peter Harbage, an independent health care consultant affiliated with the New America Foundation think tank. "This would have been one of the biggest reform efforts in the nation in a very long time, really since the Clinton effort" in the mid-1990s.

The Republican governor's proposal, crafted after months of contentious negotiations with Assembly Speaker Fabian Núñez, D-Los Angeles, sought to put the state on a path to universal coverage and fundamentally change how health care is provided. Businesses would have faced a new requirement to cover workers, and individuals would have had to carry insurance.

The plan would have expanded government health programs to cover more poor and working-class residents, and taxed hospitals and cigarettes to help pay for it. Insurance companies, notorious for weeding out sick customers, would have had to halt that practice.

Altogether, about 3.6 million of the 5.1 million permanently uninsured residents would have received coverage.

But the $14.7 billion proposal ultimately may have been undone by a state budget deficit of roughly the same size. A warning last week of potentially huge shortfalls made it difficult for even liberal Democrats to get behind the landmark plan.

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Posted by healthinsurance at 09:41 AM | Comments (0)

February 01, 2008

The California Health Plan Collapse: Another Big Lesson in What Not to Do in Health Policy

The collapse of Governor Arnold Schwarzenegger’s California health plan was anti-climactic. For months, it was clear that the complex $14 billion proposal reached by Governor Arnold Schwarzenegger and liberals in the California state legislature was a political non-starter. In the process of hammering out the details with the help of liberal health policy analysts, the Governor managed to alienate entire classes of groups and institutions which should have been his natural allies: the business community, doctors and hospitals, Republicans in the state legislature and the conservative voters in the state, and voters of every partisan persuasion who did not think it was a good idea for taxpayers to subsidize health insurance for illegal aliens. Alienating that many constituencies over one issue is a unique achievement. So, it was a good lesson in the politics of health care reform, and what exactly not to do.

The obvious and more important- and broadly overlooked- fact about the now dead California Plan is that it was not even a reform, if that word has any meaning at all. It was largely an expansion of the status quo. What Schwarzenegger and his legislative allies proposed was, with minor exceptions, simply to accept the current structure and financing of the existing health care system- the mix of public and private, employer-based health insurance arrangements that exist today- expand it, and then slap mandates on both employers and individuals to force them to participate in today’s flawed system. New taxes on doctors and hospitals, plus cigarette taxes- a thoroughly unreliable stream of funding- would be imposed to finance the thing. Not surprisingly, many liberal policy analysts are now saying that the failure of California is proof that health care cannot be reformed at the state level, and that only Washington can be entrusted with getting it right. Drew Altman, president of the Henry J. Kaiser Family Foundation, recently told The Washington Post, “California’s failure, after coming so close, underscores the lesson that too many states don’t have the political will or the resources to reform health care on their own, and thus the need for a national solution of some kind.”

No, not quite. Aside from reforming the inequitable and inefficient federal tax treatment of health insurance, Washington can do little to improve the health care system. States can reform health care, but real reform means real reform. It means changing the structure of the health insurance markets, so that individuals and families, not government officials or employers or managed care executives, control the dollars and make the key decisions in the system. It means reviewing and repealing old and outdated insurance rules and regulations, while developing innovative and imaginative solutions to adverse selection and risk adjustment or designing pooling arrangement. It also means changing the structure of health care financing, in particular, redirecting the billions of dollars of existing government subsidies from health care institutions to individuals and families so that they can get private health insurance that they want and that they like. No, this is not easy. It’s heavy lifting. But it can be done. And every state in the union is inherently capable of doing it.

Click here for your free California health insurance quote now!

Posted by healthinsurance at 01:48 PM | Comments (0)