SACRAMENTO — Calling for massive changes throughout a healthcare system he called “broken,” Gov. Arnold Schwarzenegger on Monday proposed a $12-billion plan that would require all Californians to obtain medical insurance while helping the poorest to afford it.
The plan, which both critics and supporters called the most audacious in the country, would dramatically reshuffle the financial underpinnings of an already fragile industry. The governor said his plan would control spiraling health costs while ensuring coverage for the quarter of a million children and 5.6 million adults who lack insurance.
Employers with 10 or more workers would have to offer plans that cost them at least 4% of their payroll. Those who refuse would be required to pay an equivalent amount into the state’s insurance fund for people with no other option. That mandate, while greeted skeptically by businesses, was criticized as too lax by advocates who said that a majority of companies that now provide insurance already contribute much more money.
“It’s the equivalent of setting the minimum wage at $3 an hour,” said Anthony Wright, executive director of Health Access California, a consumer advocacy group.
Those earning more than 2 1/2 times the federal poverty level — a total of $41,500 a year for a family of three — would not receive a subsidy but would still have to buy insurance if their employer did not offer it. The cheapest plan would require families to pay $2,000 a year in premiums, and as much as $10,000 in out-of-pocket medical costs.
“By setting this as a minimum, the tendency will be to undermine and reduce the current level offered by some employers, who will use this to justify reducing their benefits much more,” said E. Richard Brown, director of the UCLA Center for Health Policy Research, who nonetheless called the proposal “very impressive” in its reach.
“Everyone in California must have health insurance,” Schwarzenegger said via teleconference from Los Angeles, where he is recuperating from a broken leg. “If you can’t afford it, the state will help you buy it, but you must be insured.”
Only Massachusetts has required all residents to carry insurance, but California’s larger population of uninsured and poor makes Schwarzenegger’s goals much more challenging. To pay for the plan, Schwarzenegger proposed placing new fees and obligations on doctors, hospitals, employers and insurers — all powerful lobbies in Sacramento.
The state GOP’s position is as expected:
“If we put any form of mandate on a business, we are seeing a jobs tax,” said Assembly Republican leader Michael Villines of Clovis, echoing the argument that Schwarzenegger himself made in 2004 when he successfully campaigned against Proposition 72. That Democratic plan would have required employers to provide health insurance or pay into a state fund.
The administration insisted that its plan did not include taxes, instead labeling the levies “coverage dividends.” The debate is more than semantic: A measure with taxes needs two-thirds support in the Legislature, giving the GOP veto power. Otherwise, it needs only a simple majority that could be obtained solely with Democratic votes.
Nice trick by the Ahnold admin, eh? Label taxes as “coverage dividends.” Wanna bet a lawyer suggested he word it that way?