Assembly Passes Major Health Care Legislation

The State Assembly voted to approve the compromise health care bill developed by Assembly Speaker Fabian Núñez and Gov. Arnold Schwarzenegger December 17. The State Senate is expected to vote on the bill (AB x1) after the new year.

The proposal would mandate that all Californians purchase health insurance or be covered through their employers or government-sponsored programs. The $14.4 billion plan would be financed through a tax on employers of up to 6.5 percent of their payroll, a new tax on hospitals, an increase in the tobacco tax, and $4.5 billion in new federal matching funds. If approved by the state Senate, the proposal would then need to be approved by voters through a referendum on the Nov. 2008 ballot.

“This bill is going to cure an illness that California faces with a health care system that is teetering on collapse,” Núñez said in announcing passage of the measure in the Assembly.

AB x1 would extend coverage to about 6.8 million Californians who lack health insurance. It would expand government programs to provide insurance to families earning less than $51,000 a year or individuals earning less than $25,500 a year. The plan also calls for expanding the Medi-Cal and Healthy Families program for the indigent. Employers would be required to provide health care to employees or pay into a state purchasing pool. It would require that insurance companies offer coverage to Californians with pre-existing medical conditions.

“With today’s vote we can see the finish line,’ Schwarzenegger said. ‘This finish line is coming closer, closer and closer.” No members of the governor’s party supported the legislation, which passed 46-31.

Senator Perata said that he wanted the legislature’s nonpartisan budget office to look at the impact of the bill on the state’s general fund before bringing it up for a vote in the Senate. The state faces a budget deficit of $14 billion in the coming fiscal year.

The California Labor Federation had offered support for the measure if it included amendments that would contain costs and if the individual mandate to purchase insurance would be balanced with exemptions or subsidies for Californians who could not afford to buy private health insurance.

After the Assembly vote, the California Labor Federation alerted afiliates that its support for the bill would depend on the ballot initiative language (which would outline how the program will be financed) and additional amendments to make the plan work for working families.

Among the concerns are:

• The bill fails to outline what will be included in the minimum health insurance plan that all California families will be required to have.

• A family of four earning $82,000 a year will not quality for any subsidies to help them pay for health care costs.

• As health care costs continue to increase faster than the rate of inflation, a mechanism to increase the employer contribution accordingly must be factored in; otherwise, working families will wind up paying for all future increases through higher deductibles and premiums, or decreased benefits.

• Employers do not have to provide health care for both full- and part-time (or high- and low-wage) workers, so they will be able to meet their obligation while only providing health care for higher-wage or full-time workers.

The Labor Federation has been working since January to hammer out a reasonable health care plan that won’t impose an unfair financial burden on California’s working families. As the reform process continues to move forward, the Federation is encouraging the Legislature to amend the bill into a health care reform plan that is affordable, accessible, and comprehensive for all Californians.