BROAD VISION FOR CARE IN STATE PLAN WOULD REQUIRE HEALTH COVERAGE.

Byline: MIKE ZAPLER and HARRISON SHEPPARD MediaNews Sacramento Bureau

SACRAMENTO -- Gov. Arnold Schwarzenegger proposed on Monday a sweeping plan to insure the health of all Californians by forcing most businesses to cover their employees and all individuals to obtain coverage through work or on their own.

The Republican governor's proposal puts the state at the forefront of national efforts to reform the health care system.

His plan would provide health coverage to the estimated 6.5 million Californians -- legal and illegal residents -- who are uninsured and put the cost burden on everyone else.

In calling for ``shared responsibility'' to solve the health care crisis, Schwarzenegger's proposal demands big contributions from some of the most powerful business and health interests in the state.

``We will fix California's broken health care system,'' Schwarzenegger pledged in an announcement televised by closed circuit from Los Angeles, where he is nursing a broken leg. ``And create a model that can be used by the rest of the nation.''

Experts noted that Massachusetts passed universal health coverage legislation last year, but said California's size and the number of people without coverage -- who are poorer than Massachusetts' uninsured -- make the task more daunting.

``It would certainly make California the leader in the nation among states in addressing the problems of health care that Congress and the Bush administration have refused to address,'' said E. Richard Brown, director of the UCLA Center for Health Policy Research.

Requiring coverage

The proposal would require all Californians to have insurance, similar to the way drivers must obtain auto insurance, employing a multiprong strategy to reach universal coverage.

Businesses with 10 or more employees would have to provide health coverage for their workers or contribute a 4 percent payroll payment -- a ``pay-or-play'' concept previously rejected by Schwarzenegger. Insurers and hospitals would have to devote 85 cents of every dollar in premiums and health spending to patient care.

Eligibility rules for the state's health program for the poor would be eased in order to cover all uninsured children, including those of illegal immigrants.

The plan also includes new costs for hospitals, which would have to pay 4 percent, and doctors, 2 percent, of their gross revenues to the state.

It would take away $2 billion in state money that county hospitals receive for indigent care and use it to insure more people in Medi-Cal, the state health insurance program for the poor.

In return, Schwarzenegger wants to boost historically low reimbursement rates for Medi-Cal to doctors and hospitals.

And he argued that the insurance mandate would bring millions of new customers to insurers, softening the blow of other aspects of the plan.

``Everyone is left with a better deal here, even though everyone has to chip in,'' the governor said.

Mixed reaction

In Los Angeles County, which has faced numerous hospital closures in recent years and massive numbers of uninsured patients, reaction from health care advocates and experts was mixed as they digested the plan. Some said it would slow the rate of hospital closures, but others said it could also lower the quality of care.

About 25 percent of adults and 15 percent of children are without insurance in Los Angeles County, according to a recent study by the Public Policy Institute of California.

Barbara Siegel, managing attorney for consumer health for Neighborhood Legal Services of Los Angeles County, praised the governor's plan, saying it was likely to slow hospital closures and provide more coverage for low-income families.

By increasing the Medi-Cal reimbursements by $2 billion statewide, requiring all individuals to have insurance and requiring insurers to provide coverage, she said, more hospitals will be able to afford to stay open and keep their emergency rooms functioning. In 2004 alone, six hospitals closed in the county, she said.

``We have had a rash of hospital closures and particularly emergency room closures in Los Angeles County,'' Siegel said. ``The providers continually say that because of federal law, they have to accept all comers in the ER without regard to the ability to pay or insurance coverage.

``I do think this will help the hospitals and eventually lower the cost of health coverage premiums.''

Also, by requiring insurance companies to provide coverage, she said, it will prevent a problem she has seen of insurers retroactively denying coverage for someone after the person develops an expensive medical problem. Her organization has had to file lawsuits on behalf of patients who were stuck with thousands of dollars in medical bills that they thought their insurer would cover, she said.

Concerns about care

Dr. Ralph Di Libero, president of the Los Angeles County Medical Association, supports the emphasis on prevention of health problems and the expansion of coverage for children. But he said the governor did not provide adequate funding sources for all the services he wants to provide.

He also thinks it starts to create a two-tier system of medical service delivery, in which those at the lower income levels are more commonly treated by nurse practitioners and physician assistants, rather than the doctors themselves.

The wording in the governor's written proposal calls for ``expansion of lower-cost models of health care delivery such as retail-based medical clinics by making scope of practice changes for `physician extenders' such as nurse practitioners and physician assistants.''

Di Libero said he fears that model could lead to inadequate treatment for low-income patients.

``They'll hand them over to a system where we physicians are really not involved,'' Di Libero said. ``(Physician extenders) are trained to be supervised. Now they're going to do all this without physician oversight -- and I think physician oversight is absolutely necessary.''

The county, he said, is facing serious problems, as it is averaging one emergency room closure every year. In the past two years alone, two ERs closed in South Los Angeles serving 100,000 patient visits a year.

Republican lawmakers remain concerned about the governor's plan to provide coverage for illegal immigrants.

``We do not believe the best use of taxpayer dollars is to provide taxpayer-funded health insurance for illegal immigrants,'' said Sen. George Runner, R-Lancaster, vice chairman of the Senate Health Committee, in a written statement. ``There is a difference between allowing everyone access to health care and forcing taxpayers to pay for health insurance for illegal immigrants -- health insurance that may be better than what many citizens have access to.''

`A bold step'

He said Senate Republicans plan to introduce their own health care proposal later this month.

Officials with the Los Angeles County Department of Health Services are still analyzing the governor's plan, but gave it preliminary positive reviews. Department spokesman Michael Wilson said the agency supports universal coverage and any means to expand health care coverage and access.

``The department applauds the governor's effort to take a bold step in redefining the healthcare delivery system and making health care a priority on the state agenda,'' Wilson said in a written statement. ``The department further supports the plan's inclusion of coverage for California's undocumented population as we seek to manage chronic illness and decompress an overburdened emergency system.''

The Legislature's most powerful Democrat, Assembly Speaker Fabian Nunez, D-Los Angeles, gave the Republican governor's plan a glowing review.

``I can tell you today with certainty that in 2007 the California Legislature and the governor will produce health care reform that ensures that each and every Californian has access to a good health care coverage in this state.''

Nunez's counterpart in the state Senate, Democrat Don Perata of Oakland, was more guarded, saying there were encouraging parts of the plan but that he wanted more details.

Schwarzenegger may have a harder time winning over Republicans, although his aides insisted that the plan would need a majority, not a two-thirds, vote. If that opinion holds up, it could diminish Schwarzenegger's own party's role in the debate.

Still, health care reform is notoriously complex and difficult to achieve, affecting an array of savvy, well-heeled interests. Business, health industry, labor and consumer groups went out of their way to praise the governor's ambitions and certain components of his plan, but are almost certain to step up their opposition to planks they deem harmful.

Labor and consumer groups zeroed in on the individual insurance mandate, arguing that it would saddle hundreds of thousands of residents who don't get insurance at work with health insurance bills they can't afford.

``It's a tax on the middle class,'' said Art Pulaski, executive secretary-treasurer of the California Labor Federation.

They also called the proposed 4 percent payroll levy on businesses that don't provide insurance for their workers too low.

California Chamber of Commerce President Allan Zaremberg worried that the proposal will hurt small businesses and will not generate enough money to reach universal coverage. That, he said, could increase pressure for future tax increases.

Insurance companies focused on the mandates to insure people with pre- existing illnesses, and to spend 85 percent of dollars from premiums on patient care, with the rest for administrative costs and profit.

``It really becomes a form of rate regulation,'' said Chris Ohman, chief executive of the California Association of Health Plans.

MediaNews Staff Writer Barbara Feder contributed to this report.

mzapler(at)mercurynews.com

Universal health care

Here are highlights of Gov. Arnold Schwarzenegger's health care reform plan:

Employers would have to offer health insurance or contribute 4 percent of their payroll costs to buy insurance through the state.

Insurance companies could not decline to cover applicants based on their age or health.

Insurance companies and hospitals would have to use 85 percent of revenue from premium payments for patient care rather than profits and administration.

Doctors would pay 2 percent and hospitals 4 percent of their gross revenues to the state to help the uninsured obtain coverage.

CAPTION(S):

photo, box

Photo:

Appearing via video conference, Gov. Arnold Schwarzenegger discusses his plan to extend health coverage to nearly all Californians during a news conference in Sacramento on Monday.

Rich Pedroncelli/Associated Press

Box:

Universal health care (see text)