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The Unmentionable Part Of Health Care Reform

by: David Dayen

Tue Dec 18, 2007 at 10:44:51 AM PST

I thought this was the key moment in the Appropriations Committee debate over ABx1 1, which passed the Assembly yesterday.

Republican Assemblywoman Mimi Walters asked Nunez and the Department of Finance whether they were certain financial projections would come through. AB x1 1 relies on $4.5 billion in federal dollars in addition to other revenue sources. Department of Finance staffer Tom Sheehy said one provision in ABx1 1 would not be implemented unless the Director of Finance declared that money to pay for the program was in hand and in state coffers.

Assemblyman Mark Leno, Democrat chairman of the Appropriations committee, followed up with questions about whether the program could be turned off if money did not come in as expected. Nunez' staff responded that ballot initiative would contain provisions to assure that insufficient funds would trigger a series of events to pull back the program, including the individual mandate and the market reforms. It would first allow the governor and legislature to fix any fiscal imbalances. If lawmakers and the governor did not act, then the pieces of the legislation would be repealed, including the public program expansions and tax credits, returning the state to the status quo.

This is the key because this is what has happened to every single state that has tried to implement anything approaching universal health care.  They pass the bills with a lot of fanfare but are either unable to control costs or keep up with population or their numbers on revenue fall short (nobody EXPECTED the $14 billion dollar budget deficit this year, to use a parallel example), and the program has to be scaled back and eventually scrapped.  And there's no massive celebration or gathering on that day, where everyone gets in a room and congratulates each other.  But that's what's happened very single time.

The bill has some advances on the health reform front, and is not an ignoble effort.  But nobody seems to want to deal with these historical facts.  "This is better than nothing" doesn't mean anything when 5-7 years down the road, you're ACTUALLY left with nothing.  And I think walling off the funding and claiming that it's revenue neutral makes it more likely that road will be travelled again.  The state budget should reflect priorities.  We all want every Californian to have access to health care.  Paying for it with part gimmick taxes, part wishes and hopes of federal support, et cetera, shows that you really don't value it all that much.  And admitting that the program will fall apart unless people continue smoking a lot of cigarettes... well, you see where I'm headed.

UPDATE: Ezra Klein, the sharpest commentator on health care in the progressive blogosphere, on the plan:

It is, in short, a pretty good plan -- better, in certain ways, than those offered by the national Democrats -- and it's got the support of folks ranging from the Democratic legislature to Arnold Schwarzenegger to Andy Stern. I'm not super confident in its long-term prospects, as various groups are going to spend hundreds of millions to defeat the ballot initiative containing its financing package, and even if the plan survives that, I still don't believe states have the fiscal strength to sustain universal health care in times of recession. But I'd like to see it pass, if only for the momentum it would give the national conversation over health reform.

Klein doesn't get back to his native California much, so I can forgive him for later plaudits in the post about Schwarzenegger.  But I definitely associate with the remarks I've bolded.

UPDATE II: Shorter Sen. Perata: Fuhgettaboutit.

"I think it's DOA. I haven't found anybody yet that I have talked to that can make any sense out of it. It sounds ridiculous to say that we're going to have health care for everybody in four years, but in the meantime most people won't have health care because we have to cut the budget," Perata told KPIX.

On Monday, the Senate leader sent a letter to the nonpartisan legislative analyst asking what the fiscal impact of the health plan would be on California's budget deficit.

"You couldn't balance your home checkbook that way, much less run the fifth or sixth largest economy in the world," Perata continued in the interview.

Then he ended with this: "He simply does not understand the way in which this works," though it's not clear from the clip who the Oakland Democrat is referring to.

David Dayen :: The Unmentionable Part Of Health Care Reform
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Massachusetts (0.00 / 0)
Has had very substantial problems keeping the health care costs down. If the CA package actually gets implimented we will see if California is able to contain costs any better than the state that gave us Mitt Romney.

I think?

A few things (0.00 / 0)
(Disclaimer: I'm working for the It's Our Healthcare coalition which hasn't taken a position on this new legislation.  However, the following is really my personal reaction to David's comments because I think it's an interesting and important discussion).

1) As I understand it, healthcare costs are going to continue to rise faster than inflation even under a program like SB 840.  There are a lot of reasons for increased healthcare cost. For example, the medical malpractice insurance some doctors pay is increasing at a ridiculous rate.  The Right wants to claim it's because of frivolous lawsuits, but really it has more to do with the investment decisions of the malpractice insurance companies than anything else.  In any event, doctors really do have to pay a lot of money for this type of insurance and that cost must be borne somewhere. There also will be an increased demand for expensive prescription drugs. Etc. The rising cost of healthcare in real dollars is a policy issue we have to deal with no matter what.

I know a lot of folks on this list have correctly pointed to the costs of health insurance premiums as a driving force behind increased healthcare cost.  There was a bill this year that would have regulated the increase of health insurance premiums by requiring prior approval of the increases before they could be implemented.  I don't know a whole lot about the legislation itself, but Frank Russo has a write-up about it.  Needless to say, the bill failed.  But it's an issue worth exploring.  

2) I think considerations like the ones raised here are why there has been such an emphasis on shared responsibility and spreading the revenue sources around and making sure there is a dedicated funding stream to pay for the legislation.  The employer contribution would be a funding stream that wouldn't be impacted by a recession to the same degree as the general fund would.  The same goes for hospital fees.

As for the cigarette tax, I think it's disingenuous to ignore the fact that the policymakers understand revenue from that tax will decline over time but have explicitly said that they expect that decline to be counter-acted by increased money from the hospital fees.  They discussed this when they first announced their plan.  Maybe the decline in revenue will exceed the increase in revenue, but it's not obviously bad policy in the way that assuming a stable consumption of cigarettes over time is obviously bad policy.  

3) I want to point out that the implication of your argument is that we shouldn't be working on universal healthcare reform on a state level.  Ezra Klein doesn't think any state could sustain universal healthcare and thinks it needs to be a federal issue. How does this comport with your support for SB 840?  

4)  I want to point out that Ezra Klein explicitly says that he hopes the bill passes.  He may have concerns about  the "fiscal strength" of states in recession, but he sees the passage of this bill as a way to generate momentum and change the tenor of the national debate.  

5)  This is more directed at the Calitics community than at David specifically. I want to stress that I'm still not entirely clear about all of the policy changes in this particular iteration of the bill, but I know that there are some areas to be worked out. Furthermore, I expect we'll see some amendments on the floor of the Senate (if it comes to the Senate floor).  Maybe I'm wrong, but don't forget the Senate and the chance for amendments there.  

Malpractice Insurance (0.00 / 0)
Premiums are going up despite a leveling off of damage awards. SO, it's more about profits for the insurer than anything else. We could work on that.

I think?

[ Parent ]
That's not the implication (0.00 / 0)
There's nothing implicit about it.  I am extremely skeptical about a state's ability to weather the natural cycle of fiscal storms and maintain a universal health care plan, considering it's always failed at this level.  That would be true of SB 840 as well.  However, I think it's more perilous when you wall off the money from the larger budget and build in automatic scale-back mechanisms if the revenues don't match targets.  In a single-payer system, I would hope that the funding would come out of the General Fund combined with a restructuring of the revenue model.

I have been pretty consistent with this belief that state-based laboratories of democracy don't work with an issue as big as health care, for the better part of a year.  That doesn't mean you do nothing, and I would recommend vigorous industry regulation and cost control, as well as implementing all of these ancillary steps that would supposedly create all these efficiencies in the system.

Also, Sen. Perata just called this bill DOA.

[ Parent ]
Thanks for the reply (0.00 / 0)
David, I appreciate your reply.  

Re: the funding of SB 840, my recollection is that it would be funded by a number of sources including an 8% employer payroll contribution and a 4% employee contribution.  This is my recollection based on a briefing given by Sara Rogers from Sen. Kuehl's office given to East Bay for Democracy earlier this year. So caveat lector.

Here's some analysis from the Senate Health Committee:

The Lewin analysis [regarding something substantively similar to SB 840] estimated that total health care expenditures in the absence of any reforms would be about $184 billion.  Under SB 840 costs would fall to about $167 billion.  To fund the system proposed in SB 840, the report estimated that approximately $72 billion could be obtained by redirecting funds from existing federal, state, and local health care programs and close to $1 billion would come from savings in state and local employee health         benefits programs.  The remainder of funding for SB 840            would come from several new revenue sources, including employer and employee payroll taxes, a self-employed business income tax, a tax on unearned income, and a surcharge of incomes over $200,000, which would replace all current premiums, copays, and deductibles.

[ Parent ]
incidentally (0.00 / 0)
Sen. Kuehl, who is my Senator, has a detailed analysis of the bill at the California Progress Report.  She appears to not be thrilled.

[ Parent ]
Momentum (0.00 / 0)
Does it give a national plan momentum if California tries and fails?

I hope Sen. Perata is right (6.50 / 2)
I've spent a large chunk of time this morning on emails and phone calls with other small business owners who think this bill is lame.  From the half-assed article in the LA Times, I knew I was missing some key info, but what little they did give, I didn't like.  It seems there was a way too much compromise without the input of the sort of people it will actually affect.  

As a small business owner with 2 babies and no health care AND I smoke, this plan, this bill just looks like more money being sucked out of my pocket.  The reason I don't have health insurance (besides the ins. unwillingness to cover me) is that we can not afford it.  To make it worse, our family of four make way more than the max. poverty levels the bill has set as limits.  Also I'm really concerned about them expecting to be able to run this program on probable future taxes.  

Blogging While Brown Convention Atlanta, GA July 25-27, 2008

Bingo (0.00 / 0)
It seems there was a way too much compromise without the input of the sort of people it will actually affect.

Agreed. That's not to disrespect any of the good people in Sacto who were working on this, and continue to work for health care reform. But no matter how good those people are and no matter their commitment, it can never be a substitute for a deliberative process that reaches and includes as many Californians as possible at every step of the process. Maviglio claims this was the case, but legislative hearings aren't the same as public dialogue and this specific deal lacked taking the time to let the public understand and debate and discuss a plan before it was rushed to a vote.

It's a core tenet of progressive politics - the involvement of the masses, as many people as possible, is what makes democracy work and what makes individual and social needs get attention and resolution.

You can check out any time you like but you can never leave

[ Parent ]
I'm sorry this is just wrong (0.00 / 0)

There were a number of townhall meetings across the state, rallies where real people could voice their opinion. We had thousands of real people lobby their legislators. We had a house party program that had over 400 house parties across the state in the space of a week.  

It's Our Healthcare brought together a tremendous number of groups that represent people directly affected by this legislation including poor people (e.g. ACORN), people of color (the Having Our Say coalition and others), seniors (AARP, California Congress of Seniors, CARA), consumers (Consumers Union, CALPIRG), health advocacy groups (Health Access), communities of faith (too many to name), etc.  The groups collectively represent over 10 million Californians.

You can see the whole list here:


In addition, we had forty-eight hour vigils in front of the Governor's office.  We delivered thousands upon thousands of hand-written notes and personal stories (and I don't mean petition signatures, I mean real notes and real stories that take time and take thought to write).  We attended community meetings, political events, farmer's markets, etc.  

In addition we had television commercials, newspaper ads, radio spots, and online advertising.  

Don't tell me that there wasn't a public dialogue about this issue.

You just missed the boat.

[ Parent ]
How'd I miss that? (0.00 / 0)
I'm a bajillion email lists, including quite a few that focus on healthcare and two you listed. I never heard or read about any house parties or anything like that.  Even after I read your post, I had to go back and check my emails and I got nothing.

I see how I missed the ads, as I don't watch TV, listen to the radio and internet/print ads are easily ignored.  But I honestly sifted through a years worth of emails, a little over 5500 an not one thing invited me to voice my concerns.

Blogging While Brown Convention Atlanta, GA July 25-27, 2008

[ Parent ]
People talking (0.00 / 0)
is not necessarily a dialogue. What would be relevant is if you were to point out ways in which public input influenced the bill that just passed.

[ Parent ]
I think I see your point (0.00 / 0)
To be perfectly honest, it's very difficult to point to a particular part of the legislation (that most of us would understand the import of) and say "this was caused by X group talking on Y date to Z legislator."  Part of that has to do with the political reality of lobbying.  The legislation was written with a lot of input already included.  It may be sad, but a lot of times the "plans" put forth by the legislators aren't really legislation until a couple days before a vote.  So the legislation represents an intermediate stage of negotiation and input, which is followed by the amendment process.

To make an analogy to a completely mundane issue, it's like when Matt Ortega and I would go to lunch (for those who don't know, we worked together before he got his new illustrious job beating on Republicans for the DNC).  I knew Matt doesn't like Korean food so I never suggested we go get Korean food.  His input influenced where we did go partially by limiting the universe of possible options.  The same thing happened with this legislation.

However, if you go through the changes to AB 8 from its announcement to it's passage I think you'll see a lot of changes that didn't simply happen just because.


[ Parent ]
I realize it's tricky (0.00 / 0)
Trying to "prove" that public input made a difference. But by the same token, I could talk to a wall all day about how it's in my way and really should move and it'll listen, but it won't move.

So I guess my point is ultimately that the relevant conversation to be had is whether the concerns raised by public input were sufficiently addressed rather than whether concerns of the public were sufficiently solicited.

[ Parent ]
A few thoughts (0.00 / 0)
I haven't personally "missed the boat" - I even contributed to the IOH text message thing a few months back - but it seems that many more Californians do not feel they were involved in the process. I never implied that your group did nothing, just that in the overall process, not enough was done to have a sustained engagement with the public on this.

There were indeed many townhall meetings, but how many of them came during this particular special session? AB 8 and AB 1X 1 are very different proposals, and to say that public input at the beginning or even the intermediate stages of the process suffices for public input at the end stage doesn't seem right to me. How many of those members of the coalition had a role in the final negotiations? If the bill had been steamrolled through the Legislature as Núñez appears to have intended, how many of those groups would have been able to have some input on this?

Building sustained public engagement with the democratic process is one of the most important projects of our overall movement, and it's also by far one of the most difficult. But when small business owners who are usually well informed politically aren't aware of what's going on, it suggests more could be done (and I include myself in that).

Ultimately I get the sense that the politics have triumphed over the quality of the policy, as most discussions with proponents of this particular reform come down to "well this is what we can get done."

You can check out any time you like but you can never leave

[ Parent ]
Hmm (0.00 / 0)
Robert, I do owe you an apology and I have already apologized below for the negative tone and personal nature of my comments.  And you are right that there was less public input on this particular piece of legislation than the whole healthcare reform debate that took place this year or even the one that took place around AB 8.  

However, I still fail to see how you are conceptualizing a sustained public engagement with these issues.  What would sufficiency look like?  Does there need to be public forums (not just public hearings) on every iteration of a bill?  

I mean, folks have made their voices heard for almost the entire year.  Their issues are largely the same now as they were before.  People who want MediCal reimbursements to increase still do. People who want to cover children still do.  People who won't accept any new taxes still won't accept any new taxes.  Some people may choose to change, to support or oppose AB 1X where they did the opposite with respect to AB 8.  But whereas their analysis of the merits of the legislation may change, they've had ample opportunity to explain their perspective, their values, their demands, the areas they'll concede, their bottom-lines, etc.  

At some point the legislation has to be put to a vote and our elected representatives, with whom we have been engaging constantly, have to cast their vote.  

Furthermore, the entire package rests upon an initiative, which is essentially a referendum on whatever package ultimately comes out of the legislature.  If people don't understand the package, if they don't approve of the package, or if they're in any way unhappy with the package, they can vote it down.    

So given all of that, it's hard for me to see how the public's voice was stifled or ignored or how it was insufficiently heard.    

Finally, "this is what we can get done" is not a purely political statement.  You can't look at policy completely in the abstract.  So "this is what we can get done" is also a policy statement that substantively addresses the desires of people to move the healthcare situation in a positive direction.  The fact that you disagree with that assessment does not imply that there is no substantive policy assessment behind it.  

I guess I see you pointing to an imperfection and taking that to imply that something is insufficient.  If you're demanding perfection, you'll be consistently disappointed.  If you're not demanding perfection, then please let me know in concrete terms what would be sufficient for you.  Again, I know what looks bad to you.  But what does "good enough" look like to you?              

[ Parent ]
You want to know what small business owners think? (0.00 / 0)
The plural of anecdote is not evidence.  You want some real data?

Here's a survey done in August of this year.  

Small Business for Affordable Healthcare recently completed a scientific survey of a randomly-selected sample of small business owners and managers across California. The purpose of the survey was to better understand how California's entrepreneurs feel about healthcare costs and about the various proposals to change the healthcare financing system that are currently pending in Sacramento.
Affordable healthcare for Small Businesses

Key findings from the Survey:

80% of those who expressed an opinion felt that employers should pay something to provide healthcare to their employees-four times as many as those who felt that employers should not have to contribute anything (20%).

75% ranked the availability of affordable healthcare as extremely or very important.

57% regard health care financing as a shared responsibility among individuals, employers and government - three times as many as do not (19%).

55% were in favor of paying into a statewide pool that would enable their employees to obtain coverage at favorable rates - over three times greater than those opposed (17%).
Affordable healthcare for Small Businesses

Regarding specific pending proposals being considered now in California, a substantial plurality (near-majority) said that they favored the basic outline of the health care reform legislation (AB 8) proposed by Assembly Speaker Fabian Núñez and Senate President pro Tem Don Perata requiring businesses that do not offer insurance to to pay 7.5% of their payroll into a pool from which their employees must purchase insurance. A slightly larger plurality supported the basic outline of the proposal made by Governor Arnold Schwarzenegger requiring all Californians to have health insurance and mandating businesses that do not offer insurance to pay 4% of their payroll into a fund. A small plurality said that they favored the single-payer plan (SB 840) authored by Senator Sheila Kuehl.

Governor's proposal - 47% in favor; 31% opposed
AB 8 - 47% in favor; 33% opposed
SB 840 - 42% in favor; 40% opposed

[ Parent ]
What I am not saying (0.00 / 0)
To be clear, I am not saying that everyone ought to get down on their knees and worship at the grail that is this piece of legislation.  I still don't know what I think about it myself.

However, there is a distinct tendency on this blog to ignore the pesky facts that get in the way of your grand theories.    

Fabooj, I completely respect your opinion and your right to make any determination you want to about this bill.  You understand how it will affect you better than I do.  It may be harmful to you (you'd know better than I), and even if it would not be harmful to you it may be too big of a risk for you to take.  It's your voice, your vote, your part in the democratic process.  And I really do respect that.  

Robert, Suppose the bill is as bad you fear. Okay, then what?  Build a coalition?  Have a public dialogue?  What the heck does a dialogue look like to you?  What kind of coalition are you imagining?  


[ Parent ]
I've seen that survey (0.00 / 0)
Did I say anything that disputes those numbers? I don't quite get the point you're trying to get across by posting this. It almost has no bearing the conversation.

BUT...When it came out, several of us were left scratching our heads an exactly who these people are and how much they make a year.  That's the huge problem for us.  Most of us don't make loads of money (this keeps us out of a lot of Small Business organizations BTW).  Insuring our families is hard enough and those who  have a spouse who can cover insurance costs know how lucky they are.  The thought of having to insure an employee or two, is overwhelming.  

There were quite a few more questions regarding this survey and it's been over 3 months since one of our representatives sent a letter asking for clarification and we're still waiting.  

Blogging While Brown Convention Atlanta, GA July 25-27, 2008

[ Parent ]
Fair enough (0.00 / 0)
I think the outfit that commissioned the survey was fairly legit from a progressive perspective.  At the very least, I know the head of it is/was plugged in to the DFA community.   Also, I know/know of some of the folks listed in the "Supporters" section and they are definitely Democrats (and at least one of them very much a supporter of Loni Hancock who is a strong progressive).  

Also, the relevance of the poll was not that your concerns were unwarranted.  I was explicit about that.  You are absolutely in a  better place to know what will help you or hurt you.  The point was in reference to Robert's "Bingo" comment as though your experience is somehow of necessity representative of what small business owners think. (Incidentally, this was a poll of small business owners, not members of the small business owner coalition).  

Now maybe the poll itself has issues.  But it's at least one giant data point that lends no credence to the idea that somehow small business owners were hostile to AB 8, that they were hostile to the Governor's plan, or that somehow (although I don't think this is actually an accurate reflection of what's happened), that they'd be hostile to a plan that was somewhere between AB 8 and the Gov's plan.

So if there's prima facie evidence that small business owners were fairly amenable to the way the plans were being shaped, there's no principled reason to think that their interests were somehow left out of the debate.  

As for the relevance to this comment thread, if the above isn't enough, you should know that there's a longer discussion going between some of us on Calitics and I posted it in that context.

Finally, for you SB 840 supporters, I actually think it's interesting how much support it has among small business owners in this poll.  The problem as I see it is the high opposition (40%) to it.  

Every poll I've seen has less than majority support for SB 840 but an encouraging amount of support for those who want to fight for it in the long-term. However, in the polls I've seen, SB 840 or single-payer (sometimes it's not specific to the legislation) has always polled with higher opposition than the other options polled.  In other words, a lot of people know they like and a lot of people know they don't like it (I assume some of this has to do with the national debate and "Socialized Medicine" than anything else, but it's pure speculation on my part). You see much less opposition for plans that include employer mandates (i.e. fees on employers to pay for healthcare) than for single-payer.  In anti-tax California, this fact is very, very politically relevant.    

Small business owners represent an important constituency that likely needs to be on board with us (i.e. progressives) to pass any kind of healthcare reform and a poll like this demonstrates how little their interests are actually represented by groups like the Chamber of Commerce that purports to represent them.  (We knew the Chamber doesn't represent small business owners, but something like this can be used to push back on the Chamber when it talks about how it represents small businesses).

The political issue with respect to SB 840 I see is how to defuse the high negatives of single-payer, especially when we know that a lot of those in opposition are hugely strident in their opposition.  It's much easier for the GOP/Conservatives to play defense on this issue than for us to play offense both because it's easier to kill a proposition than pass one and because it's easier to scare people into holding on to the status quo than making huge changes.    

If you want to understand a big part of the strategic considerations about pursuing something more like AB 8 than SB 840, it's because the opposition to something like AB 8 is significantly lower and of lower intensity (again in the polling I've seen) while the support for it is higher. (Again, all this is just me talking here and shouldn't be taken to be representative of the coalition I work for).  

If you were going to go into a proposition campaign, which would you choose?  I know some think whatever comes out of the legislature will lose anyway, but I think intensity of support and opposition is an axis besides simple (support/don't support) that ought to be considered and discussed.

And again to be perfectly explicit, I'm not talking about what makes the best policy solution, I'm talking about the perception of the various policy options and how that affects the political landscape of California.  

[ Parent ]
Hm (0.00 / 0)
I'm glad you had the poll to share, though I have to admit it seems out of character for you to cite a poll about how small business owners think when refuting a small business owner telling you what they think.

[ Parent ]
I'm really unclear what you mean (0.00 / 0)
I don't know how showing a scientific poll describing the aggregate views of small business owners is irrelevant even if it doesn't represent the views of a particular small business owner.

It seems pretty straightforward to me.    

[ Parent ]
It is relevant (0.00 / 0)
And like I said (sincerely), I'm glad you shared the poll.  But an actual small business owner (fabooj) was discussing the specific problems and concerns she had over this legislation relating to her personal experiences.

I realize there was a level of disconnect involved, but Robert was directly responding to concerns raised by a small business owner.  Your response began with "you want to know what small business owners think?"  The poll is relevant, but I was surprised by the dismissive tone.

[ Parent ]
You're right (0.00 / 0)
You're, my tone was too dismissive.  It was fair enough to call me on it. And I'm glad you did. I apologize.  

[ Parent ]
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