(November 16, 2007) A reworked Democratic health care plan that still creates a new expensive entitlement program passed the Assembly Health Committee on November 14 on a party-line vote of 10-5.

Further action by the Legislature on California Chamber of Commerce-opposed ABX1 1 (Núñez; D-Los Angeles) will occur the week of November 26.

Assembly Speaker Fabian Núñez said financing for the proposal is proceeding on a separate, but parallel track with a goal of placing it before voters on the November 2008 ballot.

No language on the financing has been presented yet, but as Speaker Núñez outlined it for the committee, the components will include a sliding scale employer tax (2 percent to 6.5 percent of Social Security wages), a 4 percent tax on hospitals and a $2 per pack increase in the tobacco tax.

Discussions on financing specifics are ongoing.

The Speaker said his plan will require Californians to purchase coverage unless the cost goes beyond 6.5 percent of family income. The intent of the proposal, he said, is that no one earning below 150 percent of the federal poverty level will be required to pay for health care; those between 150 percent and 350 percent of the poverty level will be covered through the existing Healthy Families Program; and remaining individuals up to 450 percent of the federal poverty level will receiving a tax subsidy to help purchase health coverage.
Concerns

In testimony to the committee, a representative of the administration voiced concern about the level of the employer fee in ABX1 1, its exemptions to the mandate for individuals to purchase insurance and the 450 percent cap on tax credits individuals may claim for health care expenses.

The CalChamber has pointed out that like the Speaker’s previous bill, AB 8, the latest proposal creates an employer mandate that violates the federal ERISA law. Just like AB 8, the new proposal creates the first step to government-run health care.

In addition, the Democratic proposal will establish a growing entitlement program to be funded by a declining revenue stream - tobacco taxes (rejected by voters during the last election).

The CalChamber reiterated these concerns in testimony to the committee.

Creating a new underfunded health care entitlement program will deepen an already-gaping hole in the state’s budget. Earlier the day of the committee hearing, the non-partisan legislative analyst estimated the state will soon be facing a $10 billion budget deficit ($2 billion in the current fiscal year and $8 billion in the following one).

Moreover some preliminary calculations indicate the state subsidy required by ABX1 1 will be huge and could even apply to all but a small percentage of Californians.

Republican Proposal

Rejected by the Assembly committee on a largely party-line vote was ABX1 8 (Villines; R-Clovis). The bill by Assembly Republican Leader Mike Villines emphasizes the use of health savings accounts and tax credits to help employees and businesses save for or provide health care.
Key Votes

ABX1 1

Voting for ABX1 1 were: Dymally (D-Compton), Bass (D-Los Angeles), Berg (D-Eureka), DeSaulnier (D-Concord), Eng (D-Monterey Park), Hayashi (D-Castro Valley), Hernandez (D-La Puente), Jones (D-Sacramento), Ma (D-San Francisco), Salas (D-Chula Vista).

Noes: Nakanishi (R-Lodi), Emmerson (R-Redlands), Gaines (R-Roseville), Huff (R-Diamond Bar), Strickland (R-Moorpark).

Absent/abstaining/not voting: De La Torre (D-South Gate), De León (D-Los Angeles), Lieber (D-Mountain View).

ABX1 8

Voting for ABX1 8 were: Nakanishi (R-Lodi), Emmerson (R-Redlands), Gaines (R-Roseville), Strickland (R-Moorpark).

Noes: Dymally (D-Compton), Berg (D-Eureka), DeSaulnier (D-Concord), Eng (D-Monterey Park), Hayashi (D-Castro Valley), Hernandez (D-La Puente), Jones (D-Sacramento), Ma (D-San Francisco), Salas (D-Chula Vista).

Absent/abstaining/not voting: Bass (D-Los Angeles), De La Torre (D-South Gate), De León (D-Los Angeles), Huff (R-Diamond Bar), Lieber (D-Mountain View).

Staff Contact: Marti Fisher