(January 29, 2008) In a final vote taken yesterday, the State Senate Health Committee rejected ABX1 1 (Núñez; D-Los Angeles), the Health Care Security and Cost Reduction Act.
The CalChamber along with several members of the business community opposed ABX1 1 because it would have created a new expensive entitlement program, an expanded Medi-Cal program and would have imposed a tax on employers. The financing scheme contained in ABX1 1 also depended on a declining revenue stream of increased tobacco taxes.
The CalChamber believed that the bill posed considerable risks to consumers, workers, employers and taxpayers, without any demonstrable evidence that the bill’s promise of increased health care access could be delivered over the long term.
According to CalChamber’s opposition letter, the bill’s provisions anticipated revenue that would likely be inadequate for the programs proposed. If the California Director of Finance determined revenues were inadequate, some of the programs, most notably the subsidized pool coverage for low-wage workers (though not the tax increases or many of the regulatory mandates), would be suspended. This could result in an untenable situation where coverage would be terminated in the middle of an individual’s medical treatment.
In addition, many Californians, including the self-employed, rely on affordable individual policies for their health care coverage. ABX1 1 would have imposed substantial premium increases on these individuals by inappropriately providing for guaranteed issue and community rating, while avoiding enforcement of the individual mandate. New York and New Jersey have similar individual market provisions, and suffer the highest individual health insurance premiums in the country.
Moreover, the health care package undermined the intent and spirit of the Employee Retirement Income Security Act (ERISA), which is to allow multi-state employers to provide and administer uniform health care benefits to their employees. Recent federal court rulings in Maryland and New York have emphatically held that state employer mandates violate ERISA.
During yesterday’s committee vote, members repeatedly pointed to problems with the bill’s funding mechanism and referenced a report by the Legislative Analyst’s Office showing that the plan was structurally under funded. In addition to general fund risks, the Senate President Pro Tempore Don Perata (D-Oakland) expressed concerns prior to the vote that the plan would create the third-largest program in state government in a year when California faces an estimated $14.5 billion budget shortfall. In a letter sent to Governor Arnold Schwarzenegger, Perata said, ”we have the fiduciary responsibility to approve a health care coverage plan that is both self financing and fiscally sound and a moral responsibility to protect from harm those who already have health care coverage.”
Governor Schwarzenegger responded to yesterday’s developments in a statement that said, “despite the Senate’s rejection of our comprehensive health care reform bill, I want the people of California to know that I will not give up trying to fix our broke health care system. The issue is too important and the crisis is too serious to walk away after all the great progress we have made.”
Key Vote
ABX1 1 failed to pass the Senate Health Committee on January 28, with a vote of 1-7.
Ayes: Ridley-Thomas (D-Los Angeles).
Noes: Kuehl (D-Santa Monica), Aanestad (R-Grass Valley), Cox (R-Fair Oaks), Maldonado (R-Santa Maria), Negrete McLeod (D-Chino), Wyland (Belmar), Yee (D-San Francisco).
Absent, Abstaining or Not Voting: Alquist (D-San Jose), Cedillo (D-Los Angeles), Steinberg (D-Sacramento).
Additional Materials
Health Care