Health Care Reform Teleconference Summary

A little less than an hour ago, Herb Shultz, Senior Health Policy Advisor to Governor Arnold Schwarzenegger concluded a conference call with individuals from the insurance industry. (They are holding similar calls with other stakeholders in order to get input from all interested parties). The topic of conversation was the Draft Health Care Reform Package currently clogging up email boxes across the state and country (it’s over 4 megs, so be warned).

 Mr. Shultz made very clear this was not compromise language, but rather a starting point for future discussions negotiators wanted to make available to interested parties in the interest of transparency “prior to the introduction of a bill.” So in reading the document, please note that no one involved is committing to any particular provision.

I can’t emphasize the importance of this enough. The Governor’s office, and presumably the Legislative negotiators are taking extraordinary steps to make sure stakeholders are aware of what’s happening and have an opportunity to provide input. Speaking on behalf of the Governor’s staff, Mr. Shultz made it clear they are working weekends to craft a bill and that they are listening to as many people as possible. (Moments before the teleconference began I received a call from three agents who said they’d just spent two hours talking to John Ramey and Richard Figueroa, key advisors to the Governor on health care reform, about the proposal). This willingness to listen to interested parties is quite impressive. How all it impacts the final result remains to be seen, but at least they are keeping the lines of communication open. That’s always a good thing.

Here’s a summary of my notes from the call (my comments are in italics):

  1. The provisions of the draft package are starting points, not agreements.
  2. The draft contains much that has been part of the Governor’s proposal from the beginning including wellness and prevention programs, encouragement of electronic medical records and the like.
  3. While some of the language is very specific, certain elements are statements of intent. Specifics on these items will be fleshed out by an initiative in 2008 (in the case of financing), later legislative language, or future regulations.
    • For example, concerning financing of the health care reform plan, the draft states “It is the intent of the Legislature that the provisions of this act be financed by contributions from employers; individuals; federal, state, and local government; health care providers; and others.” (Section 97, page 191). What’s significant about this is that the Governor has, from the beginning, emphasized the need for shared responsibility. The Legislature in Assembly Bill 8 (Nunez) had put most of the financing burden on employers.
    • Another topic addressed through intent language concerns tax credits to subsidize premiums for families with household incomes of 250%-to-350%. (Section 98, Page 191).
    • The third “intent” topic concerns enforcement of the requirement that all California residents obtain at least minimum health care coverage. This will be a critical component of the final package. That carriers will be required to “guarantee issue” at least some individual health plans is now a given (guarantee issue means the carrier cannot deny an applicant because of their health condition). Guarantee issue in the absence of effective enforcement of a mandate for consumers to buy coverage has resulted in dramatically higher premiums and less choice for consumers.
  4. There had been earlier discussions of limiting the amount low income individuals would pay toward their medical care and insurance premiums. The draft puts on the table no spending requirement for families below 150 percent of the Federal Poverty Level and no more than five percent for families between 150 percent and 20 percent of FPL.
  5. There is no set date for introducing an actual bill. However, Mr. Schultz did note that the goal was to try to achieve agreement on health care reform at the same time an agreement is reached on water legislation (there are concurrent special sessions on these two topics currently underway in Sacramento). The goal of negotiations over the water issue is to qualify an initiative for the February 2008 ballot. As a practical matter this means resolving the issue by mid-October (October 16th, give-or-take).
  6. The Governor’s staff is open to hearing from any and all interested parties on any element of the package.

So what to make of all this? First, as noted above, negotiators are listening; whether what they hear changes the results remains to be seen.

Second, we’re getting close to the end game for health care reform in 2007. If the goal to produce legislation is mid-October, there’s not a lot of time. Of course, there’s nothing magical about this timetable. While the goal is to resolve health care reform at the same time the water issue is resolved, if lawmakers think more time is needed, they’ll take more time.

Third, progress is being made, but passage of a health care reform package is far from certain. The draft is a starting point. There are substantial differences to bridge and the constituencies of the Republican Governor and the Democratic Legislative Leadership have different goals and agendas. There will be a lot of pain, late nights and frayed nerves before a compromise the Legislature will pass and the Governor will sign is reached — if it can be reached at all.

My personal hope is that a responsible, effective reform package can be enacted this year. In my mind, even though reform will create new challenges for insurance agents — and for the industry — the right reform is much better than no reform. I’ll be looking for:

  • details on how the purchasing pool and connector/exchange is to be operated;
  • the language surrounding the requirement that 85 percent of premiums received by carriers be spent on health benefits is also critical (the draft language is a step in the right direction, but still punishes carriers whose primary business is in the individual and small group market); and
  • whether the guarantee issue/mandate to buy provisions make sense.

There are other important issues that the final health care reform bill will address, but these are the three that I personally find of greatest concern. But hey, as long as they are willing to listen, I’m happy to keep talking (and blogging).

One thought on “Health Care Reform Teleconference Summary

  1. As Mr. Herb Schultz indicated in the call, we remain committed to open process and honest dialogue. The language is an important method to further the discussion. We have and will continue to meet with CAHU and agents throughout the state.

    Richard Figueroa
    Health Care Advisor, Office of the Governor

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