Even though the healthcare reform bill passed by the Assembly was negotiated with a Republican governor, ABX1-1 is very much a Democratic proposal at heart witness its significant expansion to cover 3.6 million uninsured Californians, including 800,000 children. It is more progressive and far-reaching than anything under serious consideration by other states, and it is a model for at least one of the Democratic presidential candidates.
Individual Mandate and Affordability
The plan does have an individual mandate, as did the bill by Senate President Pro Tem Don Perata (D-Oakland). We believe that everyone must be able to get insurance, and if affordable, everyone must carry it. There would not be an individual mandate in this version of our bill if we had not been able to win significant affordability concessions. These provisions include the expansion of eligibility for public coverage, which ensures the lowest-income Californians without employer coverage will have coverage with little or no cost-sharing.
Moderate-income families without employer coverage will have access to refundable tax credits if their share of premium costs for health coverage exceed 5.5% of their income. Employers will be required to establish Section 125 tax-free accounts so that employees can pay for health benefits on a pretax basis, lowering payroll-related taxes for employees and employers. Low-income people with incomes up to 250% of the poverty level for whom premiums for minimum coverage exceed 5% of their income are exempt from the mandate. Anyone who experiences hardship can seek an exemption as well.
Reliance on the Managed Risk Medical Insurance Board
ABX1 1 establishes a state-administered healthcare purchasing program, the California Cooperative Health Insurance Purchasing Program, or Cal-CHIPP, to be administered by the Managed Risk Medical Insurance Board. Hardly a Rube Goldberg contraption, the MRMIB successfully manages several existing healthcare coverage programs, including Healthy Families, and is directed by a publicly accountable board with both gubernatorial and legislative appointees. Additionally, the MRMIB remains subject to legislative oversight and fiscal appropriation to ensure its decisions follow the intent of AB X1-1.
Admittedly, the plan does not obliterate the role of insurance companies in the healthcare system. Given that two-thirds of Californians utilize health insurance provided through their employers, blowing up this system isn't as easy as single-payer-only advocates might hope. We do, however, change the way insurance companies do business.
AB X1-1 requires every health plan and insurer in the state to accept all applicants who are subject to the mandate, regardless of their health status or claims history. That means people who have to buy insurance coverage can no longer be excluded due to preexisting conditions. Carriers will be obligated to spend at least 85 cents of every premium dollar collected on healthcare and health benefits, ensuring value for consumers and purchasers by placing limits on rising administrative costs and profits. Regulators will establish five coverage choice categories for all individual market products, from the minimum benefit to the most comprehensive benefits, and carriers will have to offer benefits in each category. There will be one standardized HMO and one standardized PPO product in each coverage choice category, offered by each carrier, so that consumers will be better able to make gapples to applesh benefit and price comparisons. The bill also prohibits carriers from setting performance goals or quotas or providing additional compensation based on the number of people whose coverage is rescinded.
Legislative analyst's report
The nonpartisan Legislative Analyst's Office looked at AB X1-1 a roughly $15-billion enterprise funded by new revenues outside the state's general fund, including an increase in the tobacco tax, hospital fees and employer participation and largely agreed with the basic assumptions underpinning the plan.
The LAO did look at different numbers than we had for premium costs. In AB X1-1, for instance, we assumed a $250 premium cost for uninsured low-income people who would be eligible for the purchasing pool. That's a number with a built-in cushion over similar costs for Medi-Cal and the Healthy Families program. We believe we're budgeting for the correct number, but if we're wrong, and use the higher LAO number, that means we may be off somewhere in the range of 0.1% to 1.4% of the LAO's estimate of future general fund revenues. It seems to me that we're well within the range of error here.
The LAO also looked at different potential scenarios that could affect the plan, but it acknowledged that there would be risks with any healthcare plan. I believe that it's also important to identify the risks of maintaining the status quo the ranks of the uninsured in California, which has the highest number of uninsured in the country already, will continue to grow, costs will continue skyrocket and more people will be put at risk of living sicker and dying younger.
What the opponents of AB X1-1 need to do is tell us all exactly what they propose, whether it's single-payer or something else. Not the dream the details: Will it work? Who pays for it and how? How does it get the governor's signature? How does it generate support from the voters? Without real answers to those questions, opposition to AB X1-1 effectively translates into support for letting our broken system get even worse. Anyone willing to leave 3.6 million uninsured Californians behind, including 800,000 children, has the duty to provide the details of their achievable alternative.
Fabian Nuñez is the speaker of the California Assembly.