Source: SacBee.com

Senate panel OKs bill but acknowledges a deal with governor must follow.

By Kevin Yamamura - Bee Capitol Bureau

source: SacBee.com

Published 12:00 am PDT Thursday, July 12, 2007
Story appeared in MAIN NEWS section, Page A4

Legislative Democrats advanced their plan on Wednesday to provide health care for millions of uninsured Californians while admitting it remains a rough draft, setting up summer negotiations with Gov. Arnold Schwarzenegger.

The Senate Health Committee approved Assembly Bill 8, which would require employers to devote 7.5 percent of payroll to health care or contribute to a state-run insurance plan. The concept has drawn sharp criticism from businesses and general support from consumers and labor, though nearly every group wanted amendments of varying degrees Wednesday.

Assembly Speaker Fabian Núñez, the bill’s author, and Senate President Pro Tem Don Perata back AB 8 as a joint Democratic solution to the state’s rising health care costs and growing number of uninsured. Their plan would provide health care to an additional 3.4 million Californians.

“Every Democratic member of the California Legislature supports universal health care for every Californian to be a right afforded to everyone and not a privilege only for those who can afford it,” said Núñez, D-Los Angeles.

Schwarzenegger is continuing to push his own proposal, which asks employers, health care providers and individuals to contribute toward covering 6.5 million uninsured Californians.

The Republican governor unveiled his proposal in January, but it has avoided legislative committee review because it is not in bill form.

He appeared Wednesday at the University of California, Los Angeles, to promote a study showing that the percentage of Californians who received health care from employers dropped from 2001 to 2005.

He wanted to use the findings to emphasize a need to change the existing system.

“My favorite proposal is our proposal, because it spreads (the costs) out,” Schwarzenegger said, according to a transcript.

Republican lawmakers have bristled at the governor’s plan all year, asserting that his proposed 4 percent payroll charge on employers with 10 or more workers represents a tax rather than Schwarzenegger’s preferred description of it as a fee.

But Republican leaders focused their criticism Wednesday on AB 8.

Assembly Republican leader Mike Villines of Clovis called the bill’s $5 billion annual charge on businesses “the largest tax increase in California history.”

“The bill that you’re seeing moved today is going to do nothing but hurt people, hurt access, raise costs and, frankly, is not going to do what is being promised,” Villines said. “It’s well- intentioned … but at the end of the day, we will not be able to sustain it.”

More than 500 activists spilled into the fourth-floor Capitol hallway outside the Senate’s largest hearing room, most representing a coalition of labor and consumer groups that conditionally support AB 8.

Families earning less than 300 percent of the federal poverty level — roughly $50,000 for a family of three — would be eligible for subsidized coverage under the Democratic plan starting in 2010. Those Californians would have their own costs capped at 5 percent of income.

Labor and consumer groups asked for changes in the bill that would provide similar rate protections and limits on costs for all individuals, not just those earning less than 300 percent of poverty.

“The system under its current structure is simply unsustainable, facing double-digit premium increases every year,” said Angie Wei of the California Labor Federation. “This is something our members cannot continue to pay for.”

Employers said they also wanted relief from rising costs. But they believe they are being unfairly burdened under AB 8 with the 7.5 percent of payroll requirement, and they opposed the bill for that reason.

Such a mandate, they said, would force them to lay off workers and reduce their business size.

“How am I going to recoup these dollars?” asked Lorraine Salazar, co-owner of Sal’s Mexican Restaurants in Fresno, who now covers 10 of her 150 employees.

“I will have to close a location. I will have to tell 35 to 40 employees that I cannot afford to employ them anymore because of some well-intentioned legislation,” Salazar said.

Núñez sparred most with the California Nurses Association lobbyist Donna Gerber. She said his plan was essentially a stand-in for the governor’s bill and would not reduce premiums or provide adequate coverage.

“From a process perspective, in terms of how to make public policy, this appears to us to be essentially the health care version of energy deregulation,” Gerber said.

CNA supports a separate proposal, Senate Bill 840 by Sen. Sheila Kuehl, D-Santa Monica, that would set up a single-payer health system.

At one point, Gerber implied that Democrats, through AB 8, were acquiescing to the governor as a means of getting his support for a change to the state’s term-limits law next year.

That rankled Núñez, who said Gerber’s comments were “not only uncalled for, but disrespectful to the authors of the bill.”

Kuehl, who ran the hearing as chairwoman of the health committee, voted for the bill despite having her own proposal on the table. She said her vote recognized that AB 8 was a better vehicle than the governor’s plan.

The bill passed with only Democratic support.

The committee killed a separate proposal, Assembly Bill 1554 by Assemblyman Dave Jones, D-Sacramento, that would have required health insurers to seek state approval of rate increases.

Jones said his plan, unlike AB 8, would limit costs through regulation comparable to what auto insurers face.

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