State Expansions: California   

In December 2007, after nearly a year of tough negotiations to pass a comprehensive health reform bill, Governor Schwarzenegger and Assembly Speaker Fabian Núñez agreed on The Health Security and Cost Reduction Act (ABX1 1). On December 17, at the tail end of a special session, the California General Assembly passed the bill. The bill stalled in the Senate in mid-January.

If enacted, ABX1 1 would have:

• Expanded Medicaid (called Medi-Cal in California) for children, parents, and childless adults;
• Provided individuals and families with incomes up to 400 percent of poverty with subsidies and tax credits for private coverage;
• Created a statewide purchasing pool to bargain for employers and individuals buying coverage;
• Prohibited insurers from denying coverage to people based on their health status; and
• Required virtually all individuals to obtain health insurance coverage (with some exceptions for people who cannot afford coverage).

Proposed financing mechanisms for the plan included state and federal funds, an increase in the tobacco tax (by $1.50), a tax on hospitals, and an assessment on employers who do not offer health coverage to their employees (on a sliding scale from 1 to 6.5 percent of payroll). Advocates are looking to pass elements of the proposal this year, as a foundation for reform, and continue moving forward in the 2009-2010 legislative session.

Despite setback on ABX1 1, state lawmakers enacted several private market consumer protections that were consistent with the goals of health reform, including:

• SB 1440, which required insurers to spend 85 cents of every dollar they collect in premiums on health care;
• AB 2, which improved and provided greater funding to the state's high-risk pool;
• AB 1945, which addressed the problem of insurers revoking private coverage from policy holders by requiring insurers to obtain state regulators' approval before rescinding a policy; and
• SB 981 and AB 2220, which forbade hospitals and health care providers from balance billing patients for services when insurance companies refuse to pay because the provider is out-of-network.

Unfortunately, Governor Schwarzenegger vetoed these and other bills. However, in 2008, a judge awarded a consumer whose policy was unfairly revoked a multimillion dollar settlement. This case led California insurers to settle with both the state's Department of Insurance and Department of Managed Health Care over rescinded policies, reinstating and reimbursing thousands of members whose policies had been revoked. These cases bring California one step closer to achieving the consumer-friendly health care system that legislators were striving for in the bills that were vetoed. And, a January 2009 ruling by the California Supreme Court determined that patients may not be balanced billed for care in emergency rooms, as it upheld the Department of Managed Health Care's authority to prohibit this practice under federal law.

In addition, implementation of the Healthy San Francisco plan has moved forward. The plan to cover all uninsured people in the city is funded in part by assessments on employers. Local employers filed suit against the city, alleging that the law violates ERISA, but the most recent court decision has allowed the city to go forward with the plan, including the collection of employer contributions. A request for an 11-judge panel to review this decision, made by a three-judge panel of the 9th Circuit Court of Appeals, was denied. In fact, Mayor Gavin Newsome announced in February 2009 that eligibility for the program has been expanded to individuals earning up to 500 percent of the federal poverty level.

California Expansion Resources

• Appeals Court Rules That San Francisco's "Pay-or-Play" Law Is Permissible under ERISA (Families USA, October 9, 2008)
• Healthy San Francisco: A Case Study of City-Level Health Reform (Community Catalyst, August 2008)
• California's Near Miss: Understanding the Policies and Politics of the Proposed ABx1-1 Legislation (Community Catalyst, July 2008)
• Health Care Reform (California Legislative Analyst’s Office, January 2008) 
• Health Coverage in California: What Can Consumers Afford to Spend? (UC Berkeley Labor Center and UCLA Center for Health Policy Research, September 2007)
• Health Insurance: Can Californians Afford It? (California HealthCare Foundation, June 2007)
• Health Access California
• California Pan-Ethnic Health Network–Having Our Say Coalition
• It’s OUR Healthcare!    

California in the News

• Insurance Commissioner Poizner Launches Nation's First Online PPO Rating Report Card (California Deparment of Insurance Press Release, November 17, 2009)
• In San Francisco, Another Kind of Public Option (The New York Times, October 7, 2009)
• Court Asks for Obama's Stance on Healthy San Francisco (San Francisco Chronicle, October 6, 2009)
• Schwarzenegger Signs Bill to Fund Kids' Health Care (The Sacramento Bee, September 23, 2009)
• Study Finds San Francisco Health Plan Didn't Hurt Jobs (San Francisco Gate, August 21, 2009)
• Supreme Court Asked to Ax San Francisco Health Care Rule (San Francisco Chronicle, June 9, 2009)
• High Court Denies Restaurants' Stay Request (San Francisco Gate, March 31, 2009)
• Healthy San Francisco Program Survives Latest Court Challenge (California Healthline, March 10, 2009)
• Healthy San Francisco's Reach Continues to Grow (San Francisco Chronicle, February 11, 2009)
• Anthem Blue Cross Agrees to Take Back Clients, Pay $1 Million Fine (Los Angeles Times, February 11, 2009)
• Schwarzenegger Signs Bills Creating Hospital Privacy Oversight Office (Los Angeles Times, October 1, 2008)
• California Legislature Enacts No Major Health Care Overhaul but OKs Some Key Changes (Los Angeles Times, September 4, 2008)
• Health Insurance Bills Head to Governor (San Francisco Chronicle, September 4, 2008)
• Medi-Cal Cuts Would Raise Other Health Costs, Study Finds (Sacramento Bee, August 15, 2008)
• Private Hospitals Join San Francisco Health Care Plan (San Francisco Chronicle, July 11, 2008)
• Healthy San Francisco Still Working out Kinks (San Francisco Chronicle, July 2, 2008)
• Healthcare Groups Turn against Schwarzenegger Budget Plan for California (Los Angeles Times, June 26, 2008)
• California legislators revive plans to expand healthcare insurance (Los Angeles Times, June 3, 2008)
• 1,200 people to have canceled healthcare coverage restored (Los Angeles Times, May 16, 2008)
• Lessons From California (The American Prospect, April 21, 2008) 
• Anthem Blue Cross sued over rescissions (Los Angeles Times, April 17, 2008) 
• Top U.S. court backs S.F. health care (San Francisco Chronicle, February 22, 2008) 
• California Senate Panel Rejects Health Coverage Proposal (New York Times, January 29, 2008)
• Judges Tell San Francisco It Can Begin Health Plan (New York Times, January 10, 2008)      
• Núñez Bids $2-a-Pack Cigarette Tax to Pay for Health Care (San Francisco Chronicle, November 6, 2007)
• Schwarzenegger, Democratic Leaders Close to Deal on Health Care Reform (San Francisco Chronicle, September 23, 2007)
• Poll Shows Strong Support for Schwarzenegger’s Health Care Plan (San Francisco Chronicle, September 21, 2007) 
   

For general resources on state expansions, see Other Resources.

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