California Health Care Reform and the Inevitable ERISA Challenge

Few were surprised when a Federal Court struck down San Francisco’s Health Security Ordinance on ERISA grounds. There were elements of the city’s ordinance that seemed to invite a suit and to have been drafted on shaky legal grounds. What’s interesting is whether the Health Care Security and Cost Reduction Act (Assembly Bill X1-1), passed earlier this month by the state Assembly and scheduled for a Senate Health Committee hearing on January 16th, will fare any better. University of Mississippi law professor Paul Secunda, writing in the Workplace Prof Blog and Anthony Wright in a December 27th posting on the Health Access blog think it will. Chris Reed of the Union-Tribune and Daniel Weintraub at the Sacramento Bee think it won’t.

The reality is, no one knows what a court will decide until a court decides. (Those three years at law school weren’t a total waste!)  The District Court ruling,  Golden Gate Restaurant Association v City and County of San Francisco, will be appealed to the Ninth Circuit Court of Appeals. And anything could happen there. 

What’s important to keep in mind is that previous ERISA decisions by Circuit Courts, such as that of the Fourth Circuit when it overturned a Maryland law aimed at Walmart, are not controlling in California. A decision from the Ninth Circuit will be. That’s just the way Federal Appeals Court decisions work — they’re only controlling in Federal Courts in the states comprising that circuit.

ERISA has been the bane of state and local health care reform efforts for years and is one of the reasons national health care reform is likely to be required. While the authors of ABX1-1 have taken great care to avoid running afoul of ERISA, that’s a far from easy task. Just ask the San Francisco Board of Supervisors. Better still, ask the Ninth Circuit Court of Appeals.

Field Poll Shows Voters Like the Upside of Health Care Reform

California voters like the core benefits of the health care reform compromise pulled together by Governor Arnold Schwarzenegger and Assembly Speaker Fabian Nunez. According to a California Field Poll released December 21st, voters favor the package by nearly a two-to-one margin. What’s impressive is the breadth of the support. The reform package is supported regardless of political party, age, gender, ethnicity, income or  geography, albeit by varying majorities.

This demonstrates the importance of health care coverage to Californians, the real problems that exist in the current system, and the impact of nearly a year debating health care reform in which the most frequently used phrase is “the current system is broken.” In fact, of voters who say they are inclined to favor the proposal, the second most frequently cited reason (at 19 percent) is that the system is broken, or words to that effect. The most common response falls into the category the Field Poll describes as “Everyone needs insurance/you could get wiped out without insurance” with 38 percent.  In a time of substantial economic uncertainty, this result is not surprising.

Whether voters get to actually cast ballots on the reform package will depend on what happens in the State Senate. The Assembly on December 17th passed ABX1-1, also known as the Health Care Security and Cost Reduction Act. Senate President Pro Tem is holding off deliberation and a vote on the bill until the Legislative Analyst’s office has a chance to determine the impact ABX1-1 will have on the state’s finances.

What’s significant is that while ABX1-1 creates a “framework” for health care reform, none of it takes effect unless voters approve a ballot measure to finance that framework. Supporters hope to qualify that initiative for the November 2008 ballot.

The Field Poll is good news for backers of the Health Care Security and Cost Reduction Act. Starting off with 30 percent of voters saying they strongly favor the package and another 34 percent indicating they somewhat favor the plan is a great starting point for any campaign on any topic.

But that doesn’t mean the campaign is in the bag. The survey, it seems, failed to probe for the impact of arguments detractors are likely to make. Here’s the question that was asked:

“The broad outlines of the reforms being proposed call for making changes within the framework of the current health insurance system. Those who currently have insurance could retain their same coverage. Those who do not have insurance would be required to obtain a minimum level of coverage from either an employer, government agency, or by paying for it themselves. The state would subsidize the costs of insurance for low income people. Middle income families would receive tax credits if they need to buy their insurance in the open market. Insurance companies would be required to offer coverage to anyone without regard to health condition. most employers would be required to offer health insurance to their employees or pay into a state fund.”

Sounds good. Since most Americans, even rich ones, consider themselves “middle class,” those tax credits sound especially good.

But opponents of the bill are going to hammer away at the size of the taxes, the amount of government involvement and control over the health care system, the risk of health insurance premiums skyrocketing, the impact on the state’s already shaky budget, etc. There are a lot of voter hot buttons and opponents will press them all to try to defeat the initiative.

Does the fact that opponents will have ammunition doom the initiative? No. But then, this poll doesn’t mean it’s sure to pass either. Think of this Field Poll as a good benchmark. If the Senate passes ABX1-1, this poll will be a valuable tool for measuring the impact of the claims both sides will make during a very long campaign.

Senator Perata Says California Health Care Reform Will Move Forward

I’m getting whiplash. Following comprehensive health care reform through the legislative process in California has been a roller coaster ride this year. But now the twists and turns are coming faster than ever.

On Monday, the day the California Assembly passed the Health Care Security and Cost Reduction Act (ABX1-1), Senate President Pro Tem Don Perata tells a San Jose television station health care reform is dead on arrival. That’s the same day he asked Legislative Analyst Elizabeth Hill to investigate and report on the impact the health care reform package will have on California’s hemorrhaging economy.

On  Thursday, however, Senator Perata told the Contra Costa Timesthat he’ confident the ballot measure required to finance the ABX1-1 reforms will be on the November 2008 ballot. (The legislation is contingent on passage of the funding initiative). “A good idea is not going to be stopped by two weeks (delay),” he’s reported as saying. That would seem to pre-judge what Ms. Hill’s team is going to report, something Senator Perata has been careful not to do — until now.

What to make of all this? It seems to be coming down to that Legislative Analyst’s report. If it finds the health care reform package passed by the Assembly will have little or no negative impact on the state’s economy, Senator Perata has indicated he will move the bill forward. (Whether the report will convince voters come November 2008 is another matter).

If, however, Ms. Hill finds ABX1-1 is likely to make the state’s budget crisis even worse Senator Perata has indicated the bill will never leave the Senate. He’ll face tremendous pressure to bring ABX1-1 to a vote, but my guess is he’ll stand up to it.

Either way, I expect my neck won’t start feeling better until sometime around mid-January.