cross-posted from Left in SF

I’ve been a little too busy to comment on the health care plan Arnold Schwarzenegger released Monday. I think I’ve gotten enough through it so I understand what’s up with it, at least to point to some of the strengths and weaknesses. The detailed plan is here in PDF form.

The major weakness in the plan, and what I think makes it fatal as far as being a meaningful way to extend coverage to every Californian, is that it does nothing to take on the insurance industry. Californians will be required to buy private insurance. The health insurance industry has to be slavering in anticipation of this. This is driving customers into their arms by government mandate. Without meaningful government regulation. The only real requirements I can find are “Insurers will be required to guarantee coverage, with limits on how much they can charge based on age or health status, so that all individuals have access to affordable products,” and that insurers must spend 85% of “premium and health spending” on patient care. The latter seems impressive, until you learn that Medicare spends 98% of their revenue on patient care.

It seems to me, at least based on the document, that there will need to be a set-price universal service plan that meets the minimum mandated coverage, which is

The minimum health insurance benefit that must be maintained will be a $5,000 deductible plan with maximum out-of-pocket limits of $7,500 per person and $10,000 per family. For the majority of uninsured individuals, such coverage can be purchased today for $100 or less per month for an individual and $200 or less for two persons. Uninsured persons at any income level can purchase their own health coverage that meets the above requirement or, if income eligible, may obtain coverage with a state subsidy.

We’ll address the income levels for subsidized coverage in a moment, but I’ll point out that $10,000 for a family with an income of $30-40k a year is pretty damn significant. There will be a “purchasing pool” that will allow people to buy in, but I’ll be extremely surprised if there’s anything other than exactly the minimum coverage for exactly the maximum the insurance companies are allowed to charge.

So individuals will be required to purchase inadequate coverage from insurance companies. But what if you can’t afford $100-200 a month? If you make less than 250% of the Federal Poverty Limit (the FPL, which is approximately $10k/year for an individual, and $12,500/year for two), you’ll be able to get discounted participation in the purchasing pool. So if you make $25k/year, you’ll only have to pay 6% of your income for health care (which is the amount specified int he plan), which ends up being $1500/year. Which is, frankly, quite a lot of money. Especially since the coverage will not protect you from bankruptcy if you get really sick.

What about employers? They actually get off pretty easy under this plan. If they don’t cover their employees, they need to pay 4% of their gross pay to a state fund, which presumably goes to subsidize their employees’ coverage. Unfortunately, this is way less than even Wal-Mart spends on  their crappy health plan. It also seems that there’s an enforcement method specified for individuals who don’t buy coverage, but not one for companies that don’t pay. And this only affects employers with 10 or more employees, so I guess people working for smaller businesses get screwed.

There’s also a provision that seems somewhat pernicious to me: “Review health/plan benefit, provider and procedural mandates in order to reduce the cost of health care.” This means, presumably, reducing the amount of care the insurance companies are mandated to provide. So  an insurance company that’s currently required to cover birth control pills, for example, might not be required to cover them.

Finally, I promised some good points: First, it’s great (and crucial) that the plan covers undocumented immigrants. Second, there’s an acknowledgment that there are severe costs of providing care for people who don’t have primary care. Other than that, though, I don’t share the rosy view of this pan that, say, Juls Rosen and Ezra Klein do.

(I had the pleasure of working with Paula in CA-04. One could not find a more dedicated, smart, hard worker, especially for someone who is a senior in high school. Good luck Paula! – promoted by juls)

Hi everyone.
My name is Paula Villescaz and I am running to be a delegate to the state party in the 5th AD.
This is my first post on calitics, but I read and occasionally post on d-kos. I spent the 2006 election cycle working as a Finance Assistant, helping elect Charlie Brown to congress in the 4th CD. Through this work I became much more interested in party politics and I’ve attended two of the e-board meetings for the state party. I’ve discovered that the state party is largely composed of old buddies who get together to socialize every once in a while, with most meetings being poorly attended and little business getting done in them.

This is why I hope to get a seat in the 5th AD. Business is particularly lame in the 5th AD with there being a very small semblance of a central committee. This party can be alot more powerful and get alot of things done if it has more members that are less interested in playing musical chairs every year and figuring out who is going to move up in their careers. Last month Chairman Art Torres came out with a press release stating the main goals of the party for 2007, and I hope to be a part of the party acheiving these goals.
If you live in the 5th AD please consider coming out and voting for me. The meeting for the 5th is this saturday at 2 pm in the fair oaks library: Fair Oaks Library
11601 Fair Oaks Blvd
Fair Oaks, CA 95628

I hope you turn out!!

OK, so Ezra Klein is the second very smart person to look at Governor Schwarzenegger’s health care plan and say that it has community rating within it.  So I’ll grant that it’s in there.  That’s a positive step, and let me say that moving toward a universal health care system is also a positive step.  Klein looks at the details, however, and doesn’t find a lot to cheer him.

On the flip…

That said, it’s got some problems: The subsidies are too stingy, and the minimum required coverage — a very high deductible plan — isn’t nearly coverage enough. The Wyden plan, by contrast, subsidized up to 400% of the poverty line and demanded benefits equal to a Blue Cross standard plan — a barebones but still protective insurance package. The worry here is that insurers will compete by offering the least coverage for the cheapest price, and Arnold’s plan doesn’t do enough to stop that.

4% is better than that $6 and some pocket lint (or whatever) that Massachusetts is assessing, but still much less than what actual insurance costs. So there are worries as well that the 4% payroll tax on businesses will actually be an incentive to avoid offering coverage, given that businesses providing health insurance actually pay much more than that (even Wal-Mart pays more than 7%). Business folk will tell you that the difference between companies offering coverage and those shirking the responsibility is currently 7+% vs. $0, so this will actually close the gap significantly. That may indeed be true. But whether it brings other businesses up or gives corporations currently offering insurance a superficially ethical way to drop their coverage is yet to be seen. This, of course, leads into a fundamental problem with the legislation: Its preservation of the immoral, unjust, and unwise employer-based health system. The proposed bill preserves what should be destroyed, and it doesn’t bring insurance, as the Wyden plan does, into a more controllable, coherent structure through which efficiencies can be wrung out and future cost control mechanisms implemented.

So in the end, this is much better than anything I expected a Republican governor to come up with. It shifts the conversation left, includes some critical and serious components (mainly community rating), and actually does forge a serious path towards universal health care. That said, it is not a progressive reform proposal, and should not be mistook as such. It’s not generous enough, it preserves the employer-based system, doesn’t demand comprehensive basic coverage, and retains the problematic incentives wherein insurers and businesses can compete to lower costs by reducing coverage. So while it’s much better than the status quo, it isn’t even in the ballpark of ideal.

RJ Eskow is in general agreement with this assessment, doing a list of winners and losers and seeing that the insurance industry and large employers have a lot to gain.  That sounds like a plan that’ll help people!

I don’t think it’s necessary to bend over backwards and say how positive it is that a Republican governor is talking about insuring all the citizens of the state.  That they haven’t up until now is an indictment.  You don’t give somebody a reward for staying out of jail, that’s what this rush to praise seems like to me.  Details matter, and who benefits matters as well.  Under Arnold’s plan, fixing his broken leg would cost $55,000 – and not everybody has his money.  Without cost containment, you’re just giving everyone in the state the same really shitty health insurance they have now, if not worse.  And it puts the state in a major hole that they’ll have to tax businesses to dig out of.

It’s clear to me that the Democratic leaders in the state aren’t all that interested in challenging the Governor and trying to work toward a goal of single-payer universal health insurance.  I’m not sure where progressives turn to best impact the debate.  Sheila Kuehl, chair of the Senate Health Committee, seems a likely ally.  But the Democrats need to remember one thing: they have no pressure to actually deliver on health care reform.  The Governor does.  And passing a bill just to say they passed a bill is bad politics and horrible policy.

(This is my personal opinion on the subject, others may differ. The Governor’s proposal is so expansive and desperate to be liked that there’s something for everyone to praise and denounce. – promoted by dday)

OK, I think I’ve read every possible news report about the Governor’s health care proposal, and I’m still confused.  Why exactly is this called “universal care”?  It doesn’t ensure that everybody is covered, it demands it.  That’s not universal care, that’s a universal threat.  And while I agree with Ezra Klein that even single-payer health care is a universal mandate in that it uses required taxes to fund health care, applying that mandate without cutting down costs for consumers makes this a fantasy, as Ezra explains.  On the flip…

The question with an individual mandate is subsidization and affordability. If we pass a law levying an individual mandate and subsidizing premiums down to $50 a month, there’ll be few complaints. A mandate with no subsidization, however, is an impossible burden on millions of families. When evaluating an individual mandate, that’s where liberals need to focus: The generosity of the subsidies. The Wyden Plan, for instance, subsidizes up to 400 percent of the poverty line. The Massachusetts plan subsidizes up to 300 percent. The Schwarzenegger plan subsidizes up to 250 percent. That looks too low, and I’ll talk more about it later today.

I look forward to seeing that, Ezra is very good on this issue.

This plan is very reflective of the Governor’s newest persona as a post-partisan.  What makes it ultimately unsatisfying and potentially dangerous is that it lacks the same thing the Governor lacks: core beliefs.  Instead of trying to jerry-rig all of these different ways to find the money so that everyone in the state has a low, vague level of health care (if I read this right, under this plan my premiums would go up and my coverage would go down), why not step back and try to lay out what the end goals are?  I believe that health care is a right and not a privilege.  I believe the money spent on health care today is enough to fund a successful, robust system where people get quality care, doctors and hospitals make money, and the public at large is generally healthier.  If that was the goal, you wouldn’t continue to perpetuate this myth that employers have an obligation to make sure their employees are healthy.  On this score I completely agree with the LA Times editorial board:

The problem is this: It makes no sense to legally and permanently make Californians’ access to healthcare dependent on their employers. Companies hire workers and pay them for their time, talent, muscle and brains. Employers must meet certain standards to do business in the state – complying with workplace safety laws, paying the minimum wage, providing workers’ compensation insurance, etc. But they should not become the primary mechanism for the state to deliver vital services to citizens.

This is more true here than elsewhere because so many Californians who need insurance have only marginal or temporary relationships with employers. Companies, meanwhile, face plenty of challenges just staying in business and keeping up with the dynamics of the modern marketplace without being saddled with a new health insurance tax.

What ends up happening, and would still happen, is that people would stay in dead-end jobs because of their health insurance, because the subsidies wouldn’t be big enough to justify the poor care and the cost of going it alone.  And American companies are less competitive because they stand alone in bearing the burden of health care.  And taxing companies who opt out of paying for employee health care by 4% of profits is a pittance compared to actual health care costs for companies.  You’ll end up with a de facto state-run health care system with no possibility to rein in costs.  The cost-containment strategies, mainly HSAs and telling people to join a gym, are laughable.  Employers can’t provide health care and compete in a global marketplace, and the state cannot fund health care without keeping costs down.  The plan does neither.

(Never mind the fact that a key point of funding this mish-mash is by taking $2 billion out of the public health system.  The funding aspect of this is almost totally ridiculous.)

Another core belief of mine is that no plan should keep in place and largely intact the for-profit insurance system which, through greed and dirty dealing, benefits from its own stinginess in denying care and trying to eliminate the sick from their rolls.  The Governor’s plan would be the greatest thing ever to happen to the private insurance industry.  It would give them four or five million new consumers, who they would be required to provide with care.  That’s a positive step, but it does nothing to contain costs for those consumers based on age or occupation.  Insurance companies can jack up rates that Californians MUST pay.  How’s that for a license to print money? 

The CNA has a very good roundup of this plan which I urge you to read.  And I’m pleased with the reaction of Art Pulaski of CalFed.

“While the Governor’s healthcare proposal includes some positive elements, it is the wrong prescription for California’s health care crisis. This proposal will be a boon to insurance companies, but a bust for most workers. This plan requires all Californians to buy health insurance with no guarantee that it will be affordable or that coverage will be adequate. We are concerned that the plan creates an incentive for employers who currently provide health care to drop coverage and instead pay only a minimal tax.”

That’s it in a nutshell.  And I really hope that Democrats in the Legislature, who were very nearly effusive in their praise of this strategy, wake up and figure this one out.  Perata and Nuñez are pretty much alone in their support.  Is this tactical?  If so, it’s the worst tactical maneuver I’ve ever seen, and calls into question what their goals for health care really are.  It doesn’t seem to be changing a broken system.  It doesn’t seem to be making health care affordable for everyone.  It doesn’t seem to be doing anything but making insurance companies rich.

This is a very Republican program in that it puts the risk and burden of health care, largely, on individuals.  Just like moving pensions to defined contributions from defined benefits, just like proposals to privatize Social Security instead of keeping it protected, just like “free trade” causes job insecurity for the vast amount of America’s workers, the message to individuals is simple: YOYO.  You’re On Your Own.  That’s what this proposal is for Californians.