California Health Care Proposals Could Set Stage For A Government-Run System

March 15--Obamacare is unraveling. California can't create its own replacement, at least not yet.

So health care advocates and lawmakers are working on a piecemeal approach. They want to offer a public insurance option to compete with private companies. They want to increase subsidies for those buying insurance through Obamacare. They want to cover most undocumented immigrants. They want to lower prescription drug costs.

A new coalition of California labor and health advocacy groups -- including Health Access California and the Service Employees International Union -- will unveil the latest legislative push Thursday, outlining Democratic-led efforts supporters say will improve the state's health care financing and delivery system.

Legislation is still being crafted, but any major overhaul will face steep political and financial challenges. Rough estimates indicate the costs for measures to expand access, improve quality and lower consumer costs could be as much as $10 billion -- an amount lawmakers acknowledged is not available in this year's budget.

Key players on health care in Sacramento, including the California Hospital Association and the California Medical Association, are not involved in early discussions and its chances in an election year are unclear.

But advocates are trying.

"We think this is a path that gets us to universal care and coverage," said Anthony Wright, executive director for Health Access. "We don't see this in any way as competing with the broader reform efforts. In fact, this gets us closer to a 'Medicare-for-all' type system, and if the window of opportunity opens at the federal level, that means we'll be this much closer to take the leap when it's possible."

These are proposals under discussion in the state Legislature:

Creating a California public insurance option

Under this approach, the government could compete with private insurers in the health care marketplace and offer more coverage choices in regions with few current options or high-priced plans.

The idea is attractive to policymakers like Assemblyman Jim Wood, D-Healdsburg, who represents a large swath of the North Coast, extending from Santa Rosa north to the Oregon border.

"As someone who represents a very rural district, there is appeal to this for me personally," he said. "We have less competition in the health care plans that are available out there, so why not have this as an option? For people (who) simply don't have a lot of choices, this could be an amazingly positive opportunity for them."

One idea would add a government-run public option to the current plans offered through Covered California. Another approach would build on Medi-Cal, expanding it to create a competitive alternative to existing plans.

Expanding state financial assistance to purchase insurance

State Sen. Ed Hernandez, D-Azusa, has introduced Senate Bill 1255 to expand existing federal subsidies with state money to help consumers purchase insurance on Covered California.

A report released this week to the Assembly's special health committee, charged with identifying a path to universal coverage in California, also recommended lawmakers make Obamacare more affordable by boosting financial assistance with state dollars.

Hernandez is eying $900 million that was set aside for the Children's Health Insurance Program if the federal government had de-funded it. But that never happened.

"I'm hoping that money can help reduce the cost of health insurance through Covered California," Hernandez said.

California Department of Finance spokesman H.D. Palmer warned, however, that the state could be on the hook for future cost increases for new programs, such as the idea Hernandez is suggesting. Federal funding for the children's health program is expected to decline in future budget years "which means, by definition, the state share would have to increase over time."

Covering undocumented immigrants

At present, the vast majority of Californians -- 93 percent -- have some type of coverage. There are roughly 3 million remaining uninsured residents. Nearly 2 million of them are undocumented immigrants, who are not covered by Obamacare. Many have incomes that would enable them to qualify for Medi-Cal.

State Sen. Ricardo Lara, D-Bell Gardens, previously led the state's efforts to expand Medi-Cal to kids. Now he wants to do the same for undocumented immigrants ages 19 and older who don't currently qualify for the program.

He's tried it before -- four times -- unsuccessfully. This year he's proposing it again with Senate Bill 974, which could go far in reducing the ranks of California's uninsured. Gov. Jerry Brown has not been receptive.

"The governor never had animosity toward the population we're trying to serve...it was trying to get to the real cost," Lara said. "I think this is a perfect year for us to make this happen."

Imposing a California individual mandate

President Donald Trump, backed by Republicans in Washington, has formally ended the individual mandate under Obamacare that requires citizens to have health coverage or pay a federal tax penalty. That requirement expires in 2019.

As a result, health insurers and policy experts are concerned healthy, young people will drop their health insurance, destabilizing markets and making coverage even more expensive.

No lawmaker has formally endorsed an individual mandate bill, but some are considering it. The California Association of Health Plans backs the idea.

"We are greatly concerned about the impact the federal repeal will have on premiums for people purchasing their own coverage, combined with the hundreds of thousands of Californians who wold choose not to purchase coverage without a mandate in place," said Charles Bacchi, president and CEO for the California Association of Health Plans.

"We are talking to policy makers about the need to introduce legislation this year that would establish a state-based individual mandate...as a way to stabilize California's health care market and protect Californians from facing even higher health care premiums."

Controlling rising health care costs

Former Vermont Gov. Peter Shumlin has recommended California lawmakers control rising health care costs by changing the way providers are paid, from a system based on volume of services to one that rewards better health outcomes.

Rising health care costs are being driven largely by unregulated prices in the commercial market, where most Californians get their health care, but also by hospital consolidations. As chains have grown bigger, health insurers and and plans have also consolidated, arming them with more purchasing power to negotiate lower prices.

But patients aren't always on the winning end of that.

"They may get lower prices, but they don't necessarily pass those on to consumers," said Larry Levitt, a health economist and co-executive director for the Program for the Study of Health Reform and Private Insurance at the Kaiser Family Foundation.

Wood wants to bring some regulatory oversight to health plan mergers, which could help drive down prices. He has proposed Assembly Bill 595, which would give state health insurance regulators the chance to deny mergers and allow the public to weigh in.

Other efforts are under way to control costs by lowering prescription drug prices, capping payment rates to medical providers and requiring health plans to limit the amount of revenue spent on profits, marketing and administrative costs, requiring them instead to spend that money on patient care.

One bill would seek to ban Medi-Cal work requirements being spearheaded by the Trump administration. Another would prevent insurance companies in California from selling bare-bones plans or charging higher premiums for people with pre-existing conditions.

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