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January 9, 2007
Governor unveils plan for universal health care
Dear FCL Supporter,
Governor Schwarzenegger has advanced a proposal which he believes will provide health care for all Californians.
Several elements of the governor's plan are of particular concern to FCL.
The centerpiece of the governor's proposal is an individual mandate requiring everyone to purchase health insurance unless provided by their employer. Many working families, perhaps millions, do not have large enough incomes to purchase health insurance and would not qualify for subsidies. While talking about "shared responsibility," for many Californians, the individual mandate requires the consumer to shoulder all of the risk. At a minimum, consumers would be required to purchase a plan with a $5,000 deductible with maximum out-of-pocket expenses of $7,500 for individuals and $10,000 for families. For many families, having to pay these sums would result in bankruptcy. Research has consistently demonstrated that increasing the costs of health care to consumers means less health care.
Schwarzenegger's plan also requires employers with 10 or more employees to provide health insurance or pay four percent of their payroll into a state pool to provide coverage. An employer such as Walmart which currently pays six percent of its payroll to provide health insurance for its executive and managerial employees (while its rank and file employees rely on government subsidies or go without), would now be told by the State of California that it could reduce its contributions from six percent to four percent. We fear that the governor's plan creates an incentive for employers to drop or reduce coverage and would amount to a huge transfer of wealth from working families to corporations.
The governor's proposal contains some favorable elements. Insurers would no longer be allowed to deny coverage for people with preexisting conditions or on account of their age. Subsidies for low-income Californians would be increased and for children in families with incomes up to 300 percent of the Federal Poverty Level ($60,000 per year for a family of four). The governor refused to enter into the debate over providing coverage for undocumented Californians, saying that a federal court decision already requires the state to provide services for the undocumented. The issue, according to Schwarzenegger, is how to provide services most economically and to avoid using emergency rooms as basic care providers. Medi-Cal provider rates would also be increased which would reduce the practice of shifting the costs of covering the uninsured to those with health insurance.
To read the text of the governor's proposal, point your web browser to: http://gov.ca.gov/pdf/press/Governors_HC_Proposal.pdf
FCL will continue to study the governor's proposal as well as other legislative proposals and provide updates via Action Alerts, Information Alerts and the FCL web page. Thank you.
Sincerely,
Jim Lindburg
Legislative Advocate
http://www.fclca.org
E-mail: JimL@fclca.org
Phone: (916) 443-3734
Fax: (916) 448-6109
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