The Governor’s Health Care Reform Plan and the Goldilocks Factor

Whether it was intentional or not, Assembly Speaker Fabian Nunez and Senate President Pro Temp Don Perata did Governor Arnold Schwarzenegger a huge favor in pushing Assembly Bill 8 through the Legislature last week. They positioned the Governor’s health care reform plan as both more the more moderate and more comprehensive alternative. The result increases the Governor’s political momentum and his negotiating leverage.

Supporters of AB 8 claim the legislation will bring nearly 70 percent of the state’s current uninsured into the system. It’s primary source of funding is a fee on every business in the state equal to 7.5 percent of their Social Security-adjusted payroll. It gives an unelected state agency the ability to raise this fee by any amount once a year (yes, by any amount). Many in Sacramento believe the agency would need to invoke that power almost immediately.

Speaker Nunez and Senator Perata claimed there’s was the reasonable compromise between the Governor’s proposal and the single-payer approach championed by Senator Sheila Keuhl. However, their context was political. Yes, the Governor’s plan needs a two-thirds majority and with Republicans holding back support that was not going to happen. Yes, the Governor vetoed Senator Keuhl’s bill, SB 840, last year and he’d do it again. Yes AB 8 only requires a majority of Legislators to pass. All of this positions AB 8 as the politically viable alternative.

Yet politics is not positioning. Consider things from Goldilocks point of view. Like most Californians outside Sacramento County and a few newsrooms scattered across the state, Goldilocks doesn’t think politically. She does, however, instinctively understood positioning. SB 840, the Papa Bear of reform, represents a government takeover of health care. That sounds scary (or too hot as Goldi would say). AB 8, the Mama Bear, fails to deliver on universal coverage and is expensive to boot. Too cold.

Then there’s the Governor’s plan. Universal coverage and no government takeover. It even spreads the cost of expanding health care beyond business which seems just right.  Meet the Baby Bear.

With this kind of positioning it’s not surprising that the Governor’s proposal is gaining support. For example, last Friday a broad coalition representing business, labor, doctors, insurers, hospitals and consumers endorsed the Governor’s plan. Yesterday the Los Angeles Chamber of Commerce lined up behind it. While possible, it is unlikely the Chamber would have endorsed a plan imposing a four percent tax on their members if it were not for the specter of AB 8’s 7.5 percent tax looming in the background, especially since AB 8 accomplishes less. No doubt more supporters will be joining the Governor in front of the cameras in the next few weeks.

As in the fairy tale, there is a danger here for health care reform Goldilocks. Governor Schwarzenegger’s health care reform plan is just that: a plan. It’s not legislation yet. The coalition forming behind it are endorsing a concept. In the next few weeks as the details emerge in that devilish way details do, some members of the coalition may start squirming. After publicly standing beside the Governor of the California it’s tough to walk away. The last thing anyone wants is the Governor publicly calling them  or their group “lying, backstabbing cowards,” or, in more politically acceptable language, “undependable and disappointing.” This is especially true if you’re a business, labor, doctor, insurer, hosptial or consumer who needs something from the state government in the next two years or so.

The Governor, whose political skills should never be underestimated, got a double win from the Legislature’s passage of AB 8. His health care reform plan looks moderate — even post-partisan. And he gains substantial negotiating leverage across a broad spectrum of stakeholders.  Which means he’s another step closer to living happily ever after.

Schwarzenegger Threatens AB 8 Veto: Update

An article in this morning’s Los Angeles Times (Schwarzenegger criticizes Democrats’ health plan) makes explicit what was implicit in the Sacramento Bee story I posted about last night: he won’t sign a bill without an individual mandate. The Times quotes the Governor as saying any health care legislation he signs “needs to have mandatory healthcare coverage and it needs to have shared responsibility.” This has been a consistent theme of the Administration when it talks about health care reform: shared sacrifice from individuals, businesses, doctors, hospitals, and insurers.

In the Times article, Governor Schwarzenegger also reiterated his opposition to a single payer approach to heatlh care reform. This means the Governor is on record as being willing to veto both reform bills the Legislature is likely to send him. His minimum criteria for a bill is pretty clear now:

  1. No 100% government run health care system
  2. No putting the burden of financing the system on business alone
  3. Everyone must be required to obtain coverage

Otherwise, the Governor has announced himself open to compromise. As he says in the Times, “We have a good shot of getting it done, not exactly my way but a compromise way.” So the ball is now in the Legislature’s court. It will be interesting to see if they try to accomodate the Governor prior to their September 14th or stick to their guns and pass bills they know he will veto. My guess? The Legislature passes both AB 8 and Senate Bill 840, Senator Sheila Kuehl’s single payer legislation. The Governor vetoes both and, in his veto message calls for a special session devoted exclusively to health care reform. This allows all the players to demonstrate their commitment to the concerns of their key constituencies, while also sending a message that it’s time to get serious and work out some compromises.

The key to whether a special session produces the right reforms will be how open the Governor and the Legislative Leadership will be to incorporating the ideas and addressing the concerns of outside parties. But that’s a topic for another post.