The Governor’s profound failure to lead in this time of crisis will be his legacy.

California’s working families are facing a crisis of epic proportions. We were hoping the Governor would use his State of the State to show us the light at the end of the tunnel — a sensible, fair proposal to balance the budget that would put people back to work and move our economy forward. We deserved much better than we heard today. Instead of embracing real solutions to lift California out of this economic morass, the Governor used his State of the State address to point fingers and peddle more empty promises.

The Governor’s repeated slash-and-burn tactics to balance the budget have left working families much worse off than we were five years ago.

Schwarzenegger’s response to the current budget crisis is so weak that he can’t even gain support from his own party, much less build consensus, bi-partisan support as true leaders do. That lack of leadership comes at severe cost to working families. Our state’s credit rating is tanking, thousands of jobs to rebuild our crumbling infrastructure are threatened and working people’s long-term economic security is in danger.

With working families facing sharply rising unemployment, mass layoffs and stagnating wages, it’s imperative that we stop the bleeding now. California should take a page out of President-elect Obama’s playbook and stimulate the economy by creating, not eliminating, jobs.  We also must take immediate steps to shore up our unemployment system and stem the tide of rising home foreclosures.

These are the real policies of change – plans that will put Californians back to work and get our economy going again.

(Note: I am an online organizer with It’s OUR Healthcare!, a coalition of over 100 member organizations that includes the California Labor Federation, AFL-CIO.)

Art Pulaski, the Executive Secretary-Treasurer of the California Labor Federation, posted a statement featured on the California Progress Report outlining the labor organization’s “support if amended” stance on ABx1 1, the recently released healthcare proposal from Democratic leadership in the State Legislature.

In the statement, Pulaski voiced strong support for creating a baseline on employer contributions towards healthcare for all employees and the creation of a statewide purchasing pool which he says “allows millions of Californians to pool their risk and resources in order to negotiate for more affordable healthcare.” Pulaski also noted support for the expansion of public programs and accompanying tax credits under ABx1 1.

However, Pulaski writes that “[d]espite these important advances, ABx1 1 still falls short.” Find out where and his recommendations on how to fix it below the fold.

To meet the needs of California’s working families, ABx1 1 and its accompanying financing provisions should be amended to address the following issues:

First, the individual mandate:

An individual mandate to purchase health insurance must be predicated upon guaranteeing that affordable, quality health care coverage is available to individuals subject to the mandate. While this legislation takes a first step toward addressing affordability, it does not ensure the quality of the health care benefit and it does not address the entire affordability issue. To address this problem, we recommend tying the affordability standard to the total cost of a comprehensive (a benefit of at the least Knox-Keene standard plus prescription drugs), high quality (minimal deductible, low annual out-of-pocket limit) benchmark plan. The minimum creditable coverage necessary to meet the mandate should be set and defined as a separate standard.

If the comprehensive benchmark plan is available to an individual for a total cost (including premiums, deductibles, and out-of-pocket maximums) that is less than a specified percent of his or her income, that person would be subject to the mandate. If it is not, the individual should be exempted from the obligation.

If an individual is subject to the mandate, he or she should have the option to buy the comprehensive plan, or to buy a more or less* generous plan, so long as the plan meets the minimum creditable coverage standard. Separating the affordability standard from the minimum creditable coverage standard guarantees that individuals will not be subject to the mandate unless there is a high quality, affordable product available to them, but still leaves them the ability to choose a less expensive plan to meet the mandate. (Ed. Note: This was a little confusing, and IOH spoke with Anastasia Ordonez of the Cal Labor Fed to clarify. There cannot be a case where there is a less generous benefit than the minimum and still meets the minimal requirements. It was an error in wording. The sentence should read: “If an individual is subject to the mandate, he or she should have the option to buy the comprehensive plan [i.e., something like Knox-Keene Act + prescription drugs], or to buy a more generous plan, so long as the plan meets the minimum creditable coverage standard.” )

To ensure that these plans offer quality coverage, the benefits and cost sharing arrangements for these plans must be outlined in the legislation. Asking Californians to accept an undefined mandate is unreasonable and unwise.

Pulaski also expressed an uneasiness with the enforcement of an individual mandate in its current form.

We are also concerned about potential enforcement mechanisms for the individual mandate. First, the enforcement of the mandate should look prospectively at the ability of a family to afford coverage, but also include protections for serious life changing events.

While we appreciate the bill’s provision for future hardship exemptions, we believe it should list basic conditions that would qualify a family for exemptions. The language should explicitly exempt Californians facing serious financial setbacks such as job loss and natural disaster. MRMIB should have the discretion to add additional circumstances at a future date. Second, families should have protections, similar to those currently afforded the uninsured facing unmanageable hospital bills, that preclude the use of collections tactics such as wage garnishment and home liens.

Noting the continuously climbing cost of healthcare and the individual mandate in ABx1 1, Pulaski writes that it “makes cost containment an even more pressing concern.”

To that end, the provisions regarding prescription drug purchasing and the creation of a public insurance option must be strengthened and clarified. Specifically, MRMIB should be empowered to directly negotiate with pharmaceutical manufacturers to obtain the lowest possible price for Cal-CHIPP enrollees. Additionally, the existing language regarding the possibility that public entities and other purchasers, including union trust funds, could access bulk prescription drug rates through Cal-CHIPP should be strengthened to guarantee that access. Only by directly tackling high drug costs and other health care cost drivers will this proposal deliver the cost containment that California’s working families need.

Pulaski set his sights on employer fees, stating support for a sliding scale because “it addresses the needs of truly small businesses,” but warns against the Governor recently suggesting the cap be at 5.5%, instead of the proposed 6.5%.

[..] The aggregate amount of employer fee dollars, however, must raise enough funds to purchase a quality benefit. Additionally, the graduated fee schedule could exacerbate employer incentives to evade their obligation.

These are the concerns of Cal Labor Fed but are supporting the overall frame work.

(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.