It was described as the nation’s boldest
attempt to reform a health care system in
serious disrepair. For more than a year, stakeholders representing hospitals, health
organizations, the governor’s office, state
assembly, employers and other key groups
made considerable progress to move forward a comprehensive bipartisan proposal
for health reform. With more than 6.8 million
in the state uninsured for all or part of a year
and an additional 6.5 million on Medi-Cal
(California’s Medicaid health insurance program that ranks dead last nationwide in
funding), the quest for a solution was urgent.
But, despite Herculean efforts, the California
Senate Health Committee could not muster
the votes to move forward the proposal.
The next chance for this level of comprehensive reform is not scheduled until 2010,
which is the time frame targeted by Gov.
Schwarzenegger. And while presidential candidates from both sides of the political aisle
continue to hammer away at reforming the
U.S. health system, comprehensive health
reform at the national level is highly unlikely.
Smart Business spoke to Barry Arbuckle,
Ph.D., president and CEO of MemorialCare
Medical Centers of Southern California and
chair of the California Hospital Association
Board of Trustees, on issues surrounding
health reform and steps employers can
take to keep California health care off the
critical list.
Why was the health reform initiative voted
down despite support of a wide range of
constituent groups?
Those voting ‘no’ used this argument: How
could we pass a health reform bill with an
anticipated cost of several billion dollars
when the state’s budget faced a $14.5 billion
shortfall? The answer is twofold. First, it is
not a choice of either/or. Both the budget
and health care challenges are strategic priorities so closely integrated that one cannot
be displaced by the other. Second, the vast
majority of monies necessary to fund the
governor’s comprehensive health reform
package would have come from sources
other than the state budget.
Hospitals were prepared to contribute
more than $2 billion, which would have
enabled the state to receive more than $4 billion from the federal government.
Considering that California ranks dead last
among the 50 states in Medicaid (Medi-Cal
in California) funding, these monies could
have been put to good use. Additional funding from individual contributions toward
their health care brought the total to an estimated $2.1 billion. And a proposed tax on
tobacco products would have brought in
another $1.5 billion.
How did the initiative impact employers?
Employers in the state that do not now
provide any health care coverage for their
employees would have had the opportunity
to either do so or, utilizing a sliding scale,
contribute a defined percentage of their payroll to a state pool. That contribution would
have represented only a fraction of what it
would otherwise cost the employer to provide health care coverage through one of the
commercial health plans.
The key to the Schwarzenegger health
reform package was its comprehensiveness,
or ‘shared responsibility/shared benefit,’ as
the governor says. No group or constituency was singled out to bear the entire burden of
reform. I liken the combination of elements
of this comprehensive reform package with
multiple constituent groups to economist
John Nash’s equilibrium theory wherein
each party, while not 100 percent satisfied
with its role, is sufficiently content such that
it does not wish to alter its position and risk
the entire agreement failing.
Employers shouldn’t forget about the hidden tax discussed in this January 2008 Smart
Business column. As a result of a growing
uninsured population compounded by
increasing under-reimbursement from the
government (providers are reimbursed more
than 20 percent below their costs), in the current system the only remaining source for
economic viability of providers is commercial health plans. Because the governor’s
health reform package would have covered a
substantial percentage of the uninsured and
increased Medi-Cal reimbursement to the
maximum allowed by federal law, providers
would have been largely relieved of the pressure to cost shift — therefore slowing this
insidious cycle of the hidden tax.
What can employers do now?
During the next months, employers can
ensure our health care system in California
stays afloat by supporting comprehensive
health reform. Do not allow individual components to be dissected out of the package
as it will effectively eliminate the equilibrium
of shared responsibility. Work with your
local congressional representatives at the
national level to resurrect Association
Health Plans — which permit small employers to come together to purchase health coverage for their employees at lower rates.
We need your help. While the fate of
California’s health care reform continues to
be debated, lack of progress could have a
devastating impact not only on the 13.3 million uninsured and underinsured but all the
state’s 36.5 million residents — from overall
health and wellness to sustainability of the
economy and our communities.
BARRY ARBUCKLE, Ph.D., is president and CEO of MemorialCare Medical Centers (www.memorialcare.org) and chair of the California
Hospital Association. Reach him at [email protected] or (562) 933-9708. MemorialCare Medical Centers include Saddleback
Memorial in Laguna Hills and San Clemente, Orange Coast Memorial in Fountain Valley, Anaheim Memorial, Long Beach Memorial and
Miller Children’s Hospital in Long Beach.