One health care plan -- Kuehl's -- is really different

By Daniel Weintraub
Sacramento Bee
Thursday, March 1, 2007

Gov. Arnold Schwarzenegger and California's legislative leaders have proposed ways to shore up our current, employer-based health care system with new mandates, taxes and subsidies to cover more people. Republican lawmakers are pushing for incentives to bolster private choice and
responsibility. But one plan proposed in the Legislature stands out as radically different from the rest.

Senate Bill 840 by Sen. Sheila Kuehl, D-Santa Monica, would scrap the status quo and replace it with a government-run, single-payer system providing comprehensive health care benefits for all, financed by taxes and free to patients at the point of service.

"California needs a system of truly universal health care now more than ever," Kuehl said this week as she reintroduced her bill, which Schwarzenegger vetoed last year. "This is not the time to wait patiently for universal health care. It's time to move forward."

Kuehl's plan would mean a vast increase in the power of government over the health care industry and the way services are planned and delivered. Hers is the only proposal on the table that seeks to directly limit the cost of health care. It would do so by setting an annual budget and then enforcing
it through negotiations with doctors, hospitals, labs and pharmaceutical companies, or by hiring health plans to provide benefits at a set cost.

Those benefits would be comprehensive. The plan would cover primary care, preventive care, outpatient and hospital care. It would cover mental health, dental, vision, podiatry, chiropractic care, acupuncture, substance abuse and prescription drugs. Even faith healing. Long-term nursing home care would not be covered.

What was concluded that the plan could be financed simply by redirecting all of the
money Californians and the federal government already spend on health care in the state. Care for those not covered now would be paid for with savings in administrative costs and the elimination of insurance company advertising and profits.

On a practical level, that would mean payroll taxes of about 4 percent for workers and 8 percent for employers, a 12 percent tax on the self-employed, a 3.5 percent tax on investment income and a 1 percent income tax surcharge on Californians earning more than $200,000 a year, the Lewin study said.

The program would be administered by a universal health care commissioner appointed by the governor, and an office of patient advocacy, an office of health planning, an office of health care quality, a public advisory committee and a payments board.

The commissioner and his or her staff would be responsible for setting the budget each year and sticking to it. They would establish a list of approved drugs for which the state would pay and try to use the power of 37 million customers to drive prices down. They would decide the appropriate number of specialists and general practice doctors in each region of the state, distribute money for the construction of new clinics and hospitals, and evaluate new medical technology to decide whether it should be paid for as part of the state plan.

The commissioner would be required by law to try to limit the growth in costs to the growth in the state's economy and population. This would be crucial because the taxes to support the program would grow at about that same rate as the economy. But with an aging population demanding more care than Californians receive today, it would be difficult to keep the system in fiscal balance for very long. Within 10 years, the independent study of the plan showed, costs would outstrip revenues by $70 billion unless current trends could be arrested.

One big cost challenge would be the system's reliance on fee-for-service medicine, in which doctors would provide whatever care they deemed appropriate and then bill the state. The private insurance industry has largely abandoned that practice in favor of more managed, coordinated systems to try to control costs. Doctor fees in the single-payer system would be set by the state, but it would be difficult to prevent physicians from providing more care to maintain their incomes.

Kuehl said the new program would have a strong anti-fraud enforcement unit, but, ultimately, it would leave broad discretion in the hands of physicians.

"We have to trust that doctors are providing the services that are needed," she said.

If costs did start to rise faster than revenues, the commissioner could postpone new benefits, decrease existing benefits, suspend capital improvements, reduce payments for prescription drugs or even impose co-payments and deductibles. If none of that worked, the commissioner could
ask the Legislature to raise the tax rates to provide more revenue.

Kuehl said this week she does not intend to amend her bill in a compromise with the governor and legislative leaders because it is a concept so different from theirs. While she does not expect Schwarzenegger to sign her bill, she says the next governor might. Or she and the plan's supporters
might take their cause to the voters.

"The facts are on our side," she said. "The people are on our side."

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