It was described as the nation’s boldest attempt to reform a health care system in serious disrepair. For more than a year, stakeholders representing hospitals, health organizations, the governor’s office, state assembly, employers and other key groups made considerable progress to move forward a comprehensive bipartisan proposal for health reform. With more than 6.8 million in the state uninsured for all or part of a year and an additional 6.5 million on Medi-Cal (California’s Medicaid health insurance program that ranks dead last nationwide in funding), the quest for a solution was urgent. But, despite Herculean efforts, the California Senate Health Committee could not muster the votes to move forward the proposal.
The next chance for this level of comprehensive reform is not scheduled until 2010, which is the time frame targeted by Gov. Schwarzenegger. And while presidential candidates from both sides of the political aisle continue to hammer away at reforming the U.S. health system, comprehensive health reform at the national level is highly unlikely.
Smart Business spoke to Barry Arbuckle, Ph.D., president and CEO of MemorialCare Medical Centers of Southern California and chair of the California Hospital Association Board of Trustees, on issues surrounding health reform and steps employers can take to keep California health care off the critical list.
Why was the health reform initiative voted down despite support of a wide range of constituent groups?
Those voting ‘no’ used this argument: How could we pass a health reform bill with an anticipated cost of several billion dollars when the state’s budget faced a $14.5 billion shortfall? The answer is twofold. First, it is not a choice of either/or. Both the budget and health care challenges are strategic priorities so closely integrated that one cannot be displaced by the other. Second, the vast majority of monies necessary to fund the governor’s comprehensive health reform package would have come from sources other than the state budget.
Hospitals were prepared to contribute more than $2 billion, which would have enabled the state to receive more than $4 billion from the federal government. Considering that California ranks dead last among the 50 states in Medicaid (Medi-Cal in California) funding, these monies could have been put to good use. Additional funding from individual contributions toward their health care brought the total to an estimated $2.1 billion. And a proposed tax on tobacco products would have brought in another $1.5 billion.
How did the initiative impact employers?
Employers in the state that do not now provide any health care coverage for their employees would have had the opportunity to either do so or, utilizing a sliding scale, contribute a defined percentage of their payroll to a state pool. That contribution would have represented only a fraction of what it would otherwise cost the employer to provide health care coverage through one of the commercial health plans.
The key to the Schwarzenegger health reform package was its comprehensiveness, or ‘shared responsibility/shared benefit,’ as the governor says. No group or constituency was singled out to bear the entire burden of reform. I liken the combination of elements of this comprehensive reform package with multiple constituent groups to economist John Nash’s equilibrium theory wherein each party, while not 100 percent satisfied with its role, is sufficiently content such that it does not wish to alter its position and risk the entire agreement failing.
Employers shouldn’t forget about the hidden tax discussed in this January 2008 Smart Business column. As a result of a growing uninsured population compounded by increasing under-reimbursement from the government (providers are reimbursed more than 20 percent below their costs), in the current system the only remaining source for economic viability of providers is commercial health plans. Because the governor’s health reform package would have covered a substantial percentage of the uninsured and increased Medi-Cal reimbursement to the maximum allowed by federal law, providers would have been largely relieved of the pressure to cost shift therefore slowing this insidious cycle of the hidden tax.
What can employers do now?
During the next months, employers can ensure our health care system in California stays afloat by supporting comprehensive health reform. Do not allow individual components to be dissected out of the package as it will effectively eliminate the equilibrium of shared responsibility. Work with your local congressional representatives at the national level to resurrect Association Health Plans which permit small employers to come together to purchase health coverage for their employees at lower rates.
We need your help. While the fate of California’s health care reform continues to be debated, lack of progress could have a devastating impact not only on the 13.3 million uninsured and underinsured but all the state’s 36.5 million residents from overall health and wellness to sustainability of the economy and our communities.
BARRY ARBUCKLE, Ph.D., is president and CEO of MemorialCare Medical Centers (www.memorialcare.org) and chair of the California Hospital Association. Reach him at firstname.lastname@example.org or (562) 933-9708. MemorialCare Medical Centers include Saddleback Memorial in Laguna Hills and San Clemente, Orange Coast Memorial in Fountain Valley, Anaheim Memorial, Long Beach Memorial and Miller Children’s Hospital in Long Beach.