The big news out of Sacramento this week, aside from the worsening budget situation, is movement on health care reform. As was liveblogged here yesterday, Sheila Kuehl’s Senate subcommittee held a public hearing and vote on AB 8, the less ambitious effort to reform health care by bringing more people into private insurance. As that hearing revealed, one of the most common statements from groups offering conditional support was that cost containment was a necessity – without it the bill was worthless, and many of the groups present would come out in opposition to it.
Cost containment is the key to AB 8. It’s the devil that lurks in the details. It’s worth a further look, if we are to believe that AB 8 is something that we who support real health care reform should help with our time and effort.
The basic problem with health care in America is that it is controlled by private insurers. In order to make massive profits, they have a clear interest in driving up the cost of premiums while at the same time denying or limiting what they pay out in actual coverage. Health care costs wind up bankrupting households and forcing businesses to either shed jobs, cut coverage (thereby hurting themselves through loss of work days due to greater frequency of illness), or close / leave the state.
As I noted back in February, universal mandate plans such as those offered by Arnold or by Mitt Romney fail because they force individuals to pay exorbitant costs with little care in return. For AB 8 to be a positive step for California, it would need to be able to bring California workers and businesses good coverage without leaving them vulnerable to soaring premiums or copays or deductibles.
Hence the focus on “cost containment” in so many of the comments yesterday. Unless there is language in AB 8 limiting costs, it could very well backfire badly on California workers and businesses, saddling them with soaring costs to help line the pockets of Blue Cross and their ilk.
So what exactly are the prospects for strong cost containment measures in AB 8? Depending on who you talk to, they’re unclear at best, dim at worst.
As Anthony Wright noted in his excellent review of yesterday’s committee meeting, Speaker Núñez actually rejected the best cost containment amendments:
Nunez said he could not, at this time, accept the committee suggestion — which consumer groups supported — that total health care costs (including premiums, deductibles and other out-of-pocket costs) be limited to 5 percent of a family’s income. Right now, under AB8, only families in the purchasing pool under 300% of poverty ($62,000 for a family of four annually) are guaranteed to not have to pay more than 5% on just their premium….Nunez also did not accept amendments that would have established minimum package of benefits for private group coverage, with regard to preventative care and cost sharing. AB8 does have a basic HMO benefit (Knox/Keene and prescription drugs) in the purchasing pool. Nunez responded that AB8 does establish three standardized products in the overall private market, to help consumers better make comparisons between plans, allowing for “apples to apples” comparisons.
As Wright noted, Núñez’ explanation for the lack of a cap on costs for all consumers was that, while he “would love nothing more” than to achieve that, there was simply not enough money available to guarantee it. Given the Republican obstinacy on the budget that makes sense – but it does also raise the question of just how useful AB 8 will actually be, especially to middle class households that make more than 300% of the poverty line but who are squeezed by rising housing and other living costs.
Jerry Flanagan, of the Foundation for Taxpayer and Consumer Rights, is less enthused about how AB 8 is shaping up. In a column today on the California Progress Report Flanagan argues that as it stands now, AB 8 is no better than the individual mandate plan Arnold proposed at the beginning of the year. He provides damning stats on how donations from HMOs to Democrats Leland Yee and Gloria Negrete-McLeod may have led them to refuse to vote on cost containment measures in a separate but related bill, AB 1554, preventing its passage (he also provides excellent stats on how Republican legislators have also benefited from HMO cash). Combined with the failure of strong cost containment amendments to AB 8 itself, this suggests that the California Nurses Association may have been correct when they argued AB 8 was no better than Arnold’s own plan.
AB 1554 is not totally dead, it can be reconsidered before the end of the 2008 session. And the amendment process for AB 8 is by no means complete. But given the pragmatic realities of this year’s budget and the resultant inability of Speaker Núñez to embrace effective cost containment language, AB 8 may not be the good, stopgap solution to tide us over until we can get single-payer accomplished that many have claimed it to be. It might in fact make the present situation even worse, as it leaves open the possibility that insurers will be able to stick workers and businesses with dramatic cost increases and worsening levels of care.
Ultimately this situation shows the need to be assertive and bold in planning health care reform in California. The current political system, averse to taxes, hostage to an obstructionist Republican minority, in thrall to large corporate contributors, and unresponsive to the needs of Californians, is what has brought about the health care crisis. That system cannot be expected to produce useful reforms all on its own, no matter the good intentions of someone like Speaker Núñez.
That doesn’t mean we’re screwed. It instead reminds us that our approach has to be holistic – that we need changes in the way California politics operates if we are to revive the fortunes of progressive Democrats and finally start addressing the problems facing Californians. It’s a truth we’ve all known for some time now.
And it finally suggests that AB 8 isn’t any more or less pragmatic than SB 840 – they both seem to encounter similar obstacles, even as SB 840 is the clearly superior solution. Clearly a lot of work has to be done in California before we can get any meaningful health care reform. Why not mobilize, then, behind single-payer, and work to shorten the distance between it and its ultimate passage, than fighting over a flawed bill such as AB 8?
