Session eyes health care

Governor, state Legislature work toward reform, and area hospitals are paying attention.

By Ryan Vaillancourt

GLENDALE — After promising to veto a health-care reform bill passed by the state Legislature on Monday, Gov. Arnold Schwarzenegger on Tuesday called a special legislative session in hopes that lawmakers will reach a compromise that is less taxing on small businesses.

The start of the session, which took effect immediately after Schwarzenegger’s announcement, came on the same day that the Legislature concluded its regular session to break for Rosh Hashana.

In addition to health care, the special session will also provide a forum to continue debate on water policy, Schwarzenegger said.

“Efforts to reform our broken health-care system and avert a water crisis are too important to walk away from simply because of a date on the calendar,” he said.

The governor added that lawmakers are “very close” to reaching an agreement on a comprehensive health-care measure.

Before the Legislature had passed Assembly Bill 8 on Monday, the governor vowed to veto it, saying in a statement that it “would put pressure on an already broken health-care system.”

The 123-page bill would require insurers to spend 85% of premium charges on patient care, leaving the remaining 15% for administrative costs and profits.

It would also require employers to spend the equivalent of 7.5% of their payroll on health care for their employees.

“AB 8 is an effort to build upon what we already have, which is predominantly an employer-based delivery system for health insurance,” said Assemblyman Paul Krekorian, whose district includes Glendale and Burbank.

But the 7.5% payroll tax is a cost that some local business owners and small-business advocates — along with Schwarzenegger — say is too high.

“How would you like to have a 7.5% decrease in pay?” asked Harry Hall, owner of Milano’s Italian Cucina and president of the Downtown Glendale Merchants Assn.

Such a payroll tax would unduly burden low-margin businesses like restaurants, and, in Hall’s case, force him to immediately trim his payroll, he said.

“The other alternative is to raise prices to other consumers, and what you see happen is the general public takes a hit,” he said. “Everything trickles down.”

But lawmakers who approved the bill lauded it as a first real step toward comprehensive reform of a system that is largely considered broken.

According to a U.S. Census report, at least 6.5 million Californians, or about 20% of the population, have no health care.

Lawmakers estimated that under Assembly Bill 8, more than two-thirds of the uninsured adults in California would gain access to health care.

Schwarzenegger is instead lobbying for a health-care reform proposal that he says would expand coverage to all Californians, a plan he intends to accomplish by spreading the cost among individuals, employers, hospitals, physicians and insurers.

The governor’s plan, which he first unveiled in January, would require all Californians to purchase some sort of health insurance. This mandate would reduce the “hidden tax” that the insured are charged by insurance companies to cover the cost of emergency care for the uninsured, Schwarzenegger said in a statement.

The governor’s plan would also levy a 4% tax on hospitals and a 2% tax on physicians. These fees would in turn go toward an increase in the Medi-Cal rate the state pays providers.

The California Hospitals Assn., of which Glendale Memorial Hospital, Glendale Adventist Medical Center and Verdugo Hills Hospital are members, lodged its support for the governor’s plan last week.

Other providers say the governor’s plan to require all Californians to purchase some sort of health plan would unduly burden low-income families.

“One of the things that we see when you’re looking at low-income Californians, people who cannot afford care, even $3-a-month-per-child coverage is cost-prohibitive for a lot of our families that we serve,” said Camille Levee, executive director of Glendale Healthy Kids, who said she opposed both proposed reform measures. “Any time you make anything mandatory . . . you buy the least you can and hope for the best.”

As lawmakers try to iron out a difference, there may be no compromise suitable to all, but the pressure is on to implement some kind of tangible reform, said Scott Hauge, founder of Small Business California, a nonprofit trade association.

“The special session ups the ante, because if you call a special session and nothing comes out of it, it’s kind of embarrassing,” he said. “It just puts the pressure up on both sides to come to a compromise.”