Perata proposes universal health coverage plan

By CMTA Staff

Capitol Update, Dec. 15, 2006 Share this on FacebookTweet thisEmail this to a friend

This week Senate President Pro-Tempore Don Perata (D-Oakland) released a proposal for comprehensive health care reform in California.  The plan, which is similar in many ways to last year’s reform in Massachusetts, seeks to cover all of the uninsured in California through a combination of expanded government safety net programs, an individual mandate on all working Californians, and a pay or play scheme for employers.  

Under the proposal all working Californians would be required to have a minimum level of coverage that has yet to be determined.  The coverage level would be determined by the Managed Risk Medical Insurance Board (MRMIB), which currently administers safety net programs such as Healthy Families, Access for Infants and Mothers, and the Major Risk Medical Insurance Program (a high risk pool for people that cannot obtain coverage in the individual market).  Enforcement of the individual mandate would be achieved by requiring all taxpayers to provide proof of health coverage when filing their taxes.  If proof of coverage is not provided, the individual’s tax would be computed without the benefit of the personal exemption credit or dependant credits.

While the details of the proposal have not been worked out, the employer mandate appears to require that employers spend a certain undefined percentage of wages that are taxable by social security.  Employers who do not elect to provide coverage to their employees would be required to pay an equivalent amount to a trust fund that would purchase health care for eligible Californians.  The proposal also indicates that employees would be required to contribute to this trust fund through a payroll tax – the level of this tax is undetermined.

The proposal released by Senator Perata also indicates that the state will seek to maximize federal funds in an effort to help cover the massive bill for covering California’s six million uninsured residents.  The proposal makes it clear that the state will need to work with the federal government to obtain the appropriate waivers to expand Medicaid eligibility in the state.  

People who are uninsured that do not qualify for one of California’s safety net programs, whether employed or not, would be able to purchase insurance through what is known as the "connector".  This connector would act as a purchasing pool for the uninsured.  Employers, especially small employers, would also be able to purchase insurance through the connector.  Health plans that seek to provide coverage through the connector would have several conditions placed on their participation:

•    Cost Containment
Participating plans would be required to cap administrative costs and profits and implement evidence-based practices such as preventative care, case management for chronic diseases, promotion of health IT (technology), standardized billing practices, reduction of medical errors, incentives for healthy lifestyles, and appropriate patient cost sharing.
•    Underwriting Standards
Contracting plans would be required to provide a guaranteed issue and community rating.  Most individuals with pre-existing conditions who are priced out of the current individual market, or cannot obtain coverage at all, would then be able to obtain coverage through the connector.
•    Plan Choice
Participating plans would be required to compete on the basis of cost and quality, making it impossible for them to fashion products intended to attract only healthy individuals.  The connector would establish ground rules so that consumers could make informed choices.  There would also be a tiered selection of plans available through each participating health plan.

Perata’s proposal is very similar in many ways to the Massachusetts reform of last year.  It will likely provide the base for each of the major competing health care proposals in 2007.  While we will likely see a simple pay or play mandate for employers, as well as a single-payer model in which private insurance is outlawed and the state assumes the role of insurer, proposals such as Perata’s will likely control the debate.  The proposal contains something for everyone to like, and something for everyone to dislike; consumer groups oppose an individual mandate, employer groups fight mandates on businesses, insurers don’t want the guaranteed issue, and even the unions appear to be facing pressure to negotiate on their demand that only employers pay, pay, pay.

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