By Callie Shanafelt
Sen. Mark Leno is trying to get 20 of his fellow California state senators to vote in favor of his single-payer healthcare legislation this week.
The proposed law, dubbed the “Medicare for All” bill, doesn’t look likely to pass.
Yet the introduction of the bill raises an interesting question: why push for radical changes to insurance and healthcare so soon after President Obama signed historic reforms into law in March of 2010?
The Affordable Care Act, the federal healthcare reform bill passed in 2010, falls short of the universal coverage advocated by Leno’s proposed legislation. Despite reform efforts, one in five people in California currently uninsured will remain without coverage, according to reports from the non-partisan California Budget Project.
“The federal reforms will still leave 3 million Californians without healthcare coverage,” Leno said. The “Medicare for All” bill is named after the federal government’s single payer plan for elderly Americans, Medicare.
Leno’s legislation would replace private insurance companies with a newly created California Healthcare Agency. The new state agency would manage the $200 billion supporters say is already spent on healthcare by employers, individuals and the state each year.
Every California resident would be enrolled automatically in the program regardless of citizenship or income.
Current healthcare providers would continue to provide care, and Californians could choose their doctor and plan, but insurance companies would no longer manage the healthcare system under Leno’s proposal.
“The federal law goes a long way to expanding coverage and making coverage more secure for those who have it, but it is different than a more universal proposal,” said Anthony Wright, executive director of health care consumer advocacy group Health Access.
Instead of a universal plan, under current reform law, coverage will be extended to four out of five uninsured people in California with three key changes: helping people with preexisting conditions afford insurance, increasing the number of people eligible for Medicaid, and establishing health insurance exchanges designed to make it easier for people to shop for and buy insurance.
More than seven million Californians are uninsured today.
Between 200,000 and 300,000 of them will qualify for coverage from the California Pre-Existing Condition Plan, according a report from the California Budget Project.
Help for people with pre-existing conditions was one of the first benefits to take effect as part of federal healthcare reform. Relatively few people in California have used the benefit so far. As of December 2011, about 6,000 Californians have signed up for the pre-existing condition plan.
Other changes are rolling out in California ahead of federal healthcare reform, including an expansion of Medicaid benefits to childless adults who earn slightly more than the federal poverty line. Medicaid is the government insurance program that has traditionally insured the poorest Americans. The federal government is providing matching funds for this expansion of the Medicaid program, called MediCal in California.
“We think this has the potential to improve the lives of Californians,” said Jean Ross, executive director of the California Budget Project. More than 220,000 Californians have signed up for the Low Income Health Program since November of 2010. More that 42 percent of currently uninsured Californians will qualify for coverage under MediCal by 2014.
Many of the remaining uninsured Californians will have access to insurance through the Health Insurance Exchange, which goes into effect in January 2014. The exchange will offer subsidized health care options to individuals and employees from small businesses. By pooling a large number of consumers, the state should be able to reduce overhead costs and offer plans with more comprehensive care than currently available to those who qualify for the exchange.
When Congress was negotiating the Affordable Care Act, the creation of a public health insurance option was one of the biggest points of contention. Ultimately, the legislation did not create a federal public health plan.
In California, however, most large counties with public hospitals have had a public health plan for more than a decade, available to low-income residents.
California counties are currently developing the health plans that will be part of the health insurance exchange in 2014, and some are considering including public plans on their exchange. Orange County has already considered and rejected the possibility of allowing uninsured people to buy coverage under public plans initially designed to help the indigent.
Help for people with limited incomes was built into federal reform: about one quarter of currently uninsured people will qualify for tax breaks to help subsidize the cost of insurance purchased on exchanges.
Some small business will get a tax break too, to encourage them to offer employee benefits, rather than shifting the burden of health insurance payments to workers. By 2014 tax credits will cover up to half of their contribution to employee health care through the exchange.
Businesses with more than 50 employees that don’t offer health benefits or offer inadequate health benefits will be fined if any of their employees seek coverage through the exchange.
Despite such tax benefits and safeguards, reform will not result in insurance coverage for all Californians. Such gaps in healthcare may have a direct impact on individual and public health, according to Anthony Wright.
People without insurance have worse health, he noted. “They live sicker. They die younger. They’re one emergency away from financial run.”
When consumers aren’t able to pay their bills it raises the cost for others, Wright added, and when patients don’t seek preventative or early treatment, they need more expensive care.
More than 15 percent of currently uninsured Californians will remain without health insurance because of their citizenship status.
Whether or not eligible people and businesses will take advantage of the reforms remains unclear.
According to the 2011 California Health Benefits Employer Survey conducted by the California Healthcare Foundation, only 21 percent of small firms have even tried to learn if they qualify for health care tax subsidies. Among those that did, only 46 percent said they are planning on taking advantage of the tax credit offered in 2010 and 2011.
The legislation mandates that every individual in the country get health insurance or face a fine, but the fine is likely to cost less than insurance, so some will remain uninsured and simply pay the fine, according to the CBP analysis.
The new system is potentially confusing, and it will take time for Californians to understand. “How do you reach every Californian and let them know what their options are?” Ross said.
Under Leno’s proposal, all Californians, including undocumented immigrants, would automatically have health insurance.
Similar bills passed in California in 2007 and 2008 but were vetoed by then Governor Schwarzenegger.
Leno’s bill is currently two votes shy of what it needs to pass the Senate by January 31, when the legislation would be put on hold for another year.
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