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California insurers to settle with both the state's Department of Insurance and Department of Managed Health Care over rescinded policies, reinstating and reimbursing thousands of members whose policies had been revoked.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
For general resources on state expansions, see Other Resources.
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