Assembly passes historic healthcare reform

By CMTA Staff

Capitol Update, Dec. 21, 2007 Share this on FacebookTweet thisEmail this to a friend

On Monday, December 17, the California State Assembly made a bold statement by passing a healthcare reform bill, ABx1 1 (Fabian Nuņez, D-Los Angeles) by a vote of 46-31.  The vote was on the heels of an agreement last week between Governor Schwarzenegger and Speaker Nuņez on how to finance the $14.5 billion dollar proposal.

The following are highlights of the bill that passed:

Individual Mandate: Requires all working Californians and dependents to have health insurance.  The coverage is to be obtained by the individual or through Cal-CHIPP (administered by the Managed Risk Medical Insurance Board, MRMIB). An exemption is made for individuals that are 250% below the Federal Poverty Level or who otherwise would be paying 5% of their families’ income.

On or before March 1, 2009, the MRMIB shall establish, by regulation, the definition of minimum creditable coverage for purposes of compliance.

Employer Contribution: Requires employers to spend on health care expenditures a rate ranging from 2 to 6.5 percent of total payroll based on social security wages OR pay an equivalent amount to the California Health Trust Fund.  
  • California employers with payrolls of up to $250,000 a year would have to spend at least 1% on healthcare for their workers.
  • Those with payrolls from $250,000 to $1 million would have to pay 4%.
  • Those with payrolls of over $1 million up to $15 million would have to pay 6%.
  • All larger employers of payrolls of over $15 million that would have to pay 6.5%.

    Employers would have the choice of providing coverage privately, as they do now, or paying a fee of this amount to the statewide purchasing pool. The expectation is that employers who provide coverage now, with no requirement, would continue to do so, just as employers pay more than the minimum wage, but the minimum creates a floor from which workers can bargain up from.

    Tobacco Tax: Taxes tobacco, rather than the leasing of the lottery as originally proposed. The additional amount will probably be from $1.50-$2.00.

    Middle-Income Subsidies: Amendments are expected to detail the subsidies for folks over 250% of the federal poverty level. Families earning between 250% and 400% of the federal poverty level ($82,600 for a family of four) would be subsidized so that their premium costs will not exceed 5.5% of their incomes. We understand that this would be tied to a premium for a middle-tier product, rather than the minimum benefit (or top-tier plan). This would mean that those families could choose to spend less than 5.5% for a minimum policy, or a set amount more for a comprehensive policy with little cost-sharing.

    Early Retirement Credit: Includes a tax credit for people who retire before they qualify for Medicare at age 65 from 400-700%FPL ($71,000 for a single person and $145,000 for a family of four) so that they would not spend more than 10% of their savings income on insurance.

    Cafeteria Plans: Requires employers to adopt and maintain a cafeteria plan to allow employees to pay premiums for health care coverage to the extent amounts for that coverage are excludable from the gross income of the employee.

    Prevention Programs: Establishes the Healthy Action Incentives and Rewards Program, the California Diabetes Service Program, the California Smokers’ Helpline and the Community Makeover Grant program.

    Expansion of Current System: Expands Healthy Families and increase Medi-Cal reimbursement rates.  

    Prescription Drug Bulk Purchasing: Provides for bulk purchasing of prescription drugs for Cal-CHIPP enrollees.

    Insurance Market Measures: Guarantees coverage in the individual market regardless of medical history. The rates will be based only on age and geographic area in the individual market. It also mandates that 85% of premiums must be spent on patient care.

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