The Health Care Reform Environment in California: Turning Toxic?

For a long time I’ve predicted Governor Arnold Schwarzenegger, Assembly Speaker Fabian Nunez and Senate President Pro Temp Don Perata would find their way to a compromise on comprehensive health care reform. The tremendous political benefits of a deal for the trio, I figured, would guide them to common ground. After all, the Speaker and the Senator need to demonstrate the legislature can produce results prior to the February vote on modifying California’s term limits law. And the Governor hates to lose, especially on an issue in which he’s so publicly invested.

Now, for two entwined reasons, I’m not so sure. First, any legislative deal needs to have enough buy-in from the constituents of the negotiators’ that they’ll support the November 2008 funding initiative required to make the legislative reforms real. Second, those constituents have all but locked the negotiators into their current positions. The result: a political context in which a handshake is just out-of-reach.

Consider just one of several contention issues: the affordability exemption to the individual mandate. The Legislative Leaders have accepted the Governor’s demand that all residents obtain health care coverage (that’s the “individual mandate” part). However, their legislation, ABX1-1, exempts individuals from this requirement if the cost of coverage and out-of-pocket medical expenses exceeds 6.5 percent of an individual’s income (the “affordability exemption”). The Governor recognizes that this formula undermines the balance he’s tried to achieve between the mandate for carriers to sell coverage and for residents to buy it. From everything I’m hearing he’s refusing to accept the exemption as written. However, the unions and consumer groups that comprise the Democratics base on health care reform have made it extremely clear they will not accept a watering down of what’s on the table.

Of course, Speaker Nunez and Senator Perata could compromise on this issue anyway. But this would make it unlikely Labor and grassroots progressives would support — either politically or financially — the 2008 financing initiative. And their support will be critical not only for passage of the measure, but in qualifying it for the ballot in the first place.

There are several other issues resulting in a similar dynamic. Moving from their current positions means either the Governor risks alienating his support in the business community or the Democrats lose the backing of the unions and consumer groups. Passing the November 2008 health care reform financing measure is going to be a huge challenge in any case given the state’s fiscal woes. If the financing package includes a cigarette tax, the tens of millions of dollars the tobacco industry is likely to against the initiative will only make the task harder. If business and/or labor sit out the campaign, the measure could be doomed. And it’s not like these groups won’t have other important issues deserving of their time, attention and resources on the 2008 ballots.

That’s why I’m no longer optimistic about the chances of California enacting comprehensive health care reform this year. (There’s still an opportunity to pass some meaningful health care bills, as I’ve written about previously).  The political will exists for a deal, but the political environment necessary for a compromise seems to be growing toxic.