California Assembly Passes Health Care Reform, But Fate Still Unclear

The California State Assembly passed Assembly Bill X1-1 on Monday, a comprehensive health care reform package negotiated between Governor Arnold Schwarzenegger and Assembly Speaker Fabian Nunez. (OK, much of the heavy lifting was done by their able staffs, but they’re paid not to take credit, so I don’t want to get them in trouble). Considering the challenges they faced — both policy-related and political — this is an amazing political accomplishment. One that is worthy of the celebratory press conference they held after the vote.

That vote, by the way, was largely along party lines (some papers are reporting it as 45 in favor; others report 46 voting “aye,” but all agree there were 31 “no” votes). The vote came just hours after publication of a spate of amendments, more than a few quite substantive. I would never suggest that Assembly Members voted on a bill of such complexity and import without thoroughly studying the legislation. But, in reality, Assembly members voted on a bill of such complexity and import without having much of a chance to thoroughly study the bill before casting their vote.

Lining up 45 or 46 “aye” votes in the Assembly was (relatively speaking) the easy part. Now it gets hard: proving the legislation is worthy of passage by the State Senate. Broadly stated, the Governor and the Speaker will need to convince Senate President Pro Tem Don Perata (and, to be fair, others in the Senate, but especially Senator Perata) that their health care reform package: 1) will not negatively impact California’s snowballing fiscal crisis; and 2) does more good than harm to the health and financial security of California residents.

Then it gets even harder: convincing California voters of the same two points. Because what the Assembly passed is only a framework for reform. It takes effect only if voters approve a ballot measure, expected to be qualified for the November 2008 ballot. (Even qualifying the financing is initiative will be challenging. Speaker Nunez has publicly stated drafting of the initiative needs to start on December 21st to make next year’s November ballot. In reality, the deadline is probably some time in January, but either way, it’s coming up fast. As discussed below, the Senate is unlikely to take up the measure, let alone pass it, until next month. This means drafting the initiative will need to be done quickly, and hasty drafting usually leads to flawed measures).

Senator Perata isn’t waiting for the Governor and Speaker to make the case on the financial issues. On Monday he asked the non-partisan Legislative Analyst’s office to report on the impact ABX1-1 will likely have on California’s budget. And by announcing the Senate will not convene prior to the start of the regular session on January 7th, he is providing the Legislative Analyst’s office time to conduct a meaningful investigation.

Then there’s the substance of the bill. The legislation is greatly improved over earlier versions — including what was passed (again on a party line vote) by the Assembly Health Committee just last month. For the record, one amendment added today of special interest to agent readers of this blog is a change recommended by the California Association of Health Underwriters and several carriers. It permits, but does not require, carriers to contract with agents and brokers to provide “marketing and servicing” of coverage offered through the purchasing pool.

Yet serious problems remain. Over the next several days there will be dozens of folks critiquing the package from the left and the right (and the diversity of opponents will be pointed to by supporters as proof that their compromise is fair). Some of the problems they’ll be identifying are extremely disconcerting. Take, for example, the enforcement of the requirement that all California residents obtain health care coverage — or the lack of enforcement, to be more precise. The enforcement mechanism seems to be limited to forced enrollment in a health care plan offering minimum coverage. This “penalty” is so weak, many Californians are likely to conclude it’s in their financial interest to wait until they need coverage before obtaining it. This, in turn, creates a New York-type health care system. And residents of New York pay, on average, individual medical premiums twice as high as do Californians.

It’s uncertain whether the State Senate will even considers ABX1-1. If it does, it’s uncertain whether they’ll seek to amend the bill. If they do make changes, it’s unclear whether those amendments will destroy the fragile compromise forged by Governor Schwarzenegger and Speaker Nunez. So it’s unclear whether comprehensive health care reform will pass the California legislature in a form that the Governor would sign. Even then it’s unclear whether voters will approve the initiative financing the bill, without which most of its provisions will never become law. And as previously posted, even if voters do approve the the ballot measure, it’s unclear whether federal health care reform will preempt the state’s effort before it can be enacted.

That’s a lot unclearness. But today is a time for Governor Schwarzenegger and Speaker Nunez — and their staffs — to celebrate a very real victory. The process of creating clarity can wait a few more hours.