By Hernan Molina

After his State of the State address on Jan. 9, Republican Gov. Arnold Schwarzenegger received national attention for his progressive environmental policy and what Democratic Lt. Gov. John Garamendi called a “courageous” and innovative “universal” healthcare plan.

"California's medical care, its medical knowledge, its medical technology is as strong and vibrant as a bodybuilder. Yet our health-care system itself is a sick old man," Schwarzenegger said in his speech.

The plan is intended to help an estimated 6.5 million uninsured Californians and curb spiraling health-care costs that directly impact the state’s economy. An initial review indicates that the plan may cover transgender needs and eliminate prohibitive pre-existing conditions, such as HIV, that make securing insurance difficult.

Political pundits who wonder if the California governor is the harbinger of a new Republicanism are watching reaction to Schwarzenegger’s “post-centrist” health-care proposal closely. It is viewed as the latest act by an actor-turned-politician who developed a better sense of the peoples’ priorities after proposals he backed in a November 2005 special election were soundly defeated. A recent poll by the California Wellness Foundation revealed that 81 percent of Californians believe government should be responsible for assuring that all Californians have affordable health-care coverage.

The immediate response was both laudatory and critical. The California Nurses Association issued a statement saying they “welcomed” Schwarzenegger’s decision to tackle the “escalating health-care crisis,” but the end result might amount to "little more than a fresh coat of paint on a collapsing house."

Republicans fumed over perceived new taxes and coverage of illegal immigrants. Adam Mendelsohn, Schwarzenegger’s communications director, shrugged off the barbs, telling GOP state Sen. Abel Maldonado, “Your district has a lot of [emergency rooms] full of” illegal immigrants whose treatment costs taxpayers money, the New York Times reported.

A recent report by the Centers for Disease Control and Prevention (CDC) estimates that chronic illnesses such as cardiovascular disease, cancer and diabetes are responsible for $445 billion in direct medical costs and $409 billion in lost productivity. A New American Foundation white paper estimates the average family pays about $1,186 a year in "hidden taxes" through health insurance premiums that cover the uninsured. In California, it is estimated that approximately 763,000 children still do not have health-care coverage, meaning that these children are more likely to not be immunized and to suffer from preventable and easily treatable health problems.

Schwarzenegger’s plan proposes the following:

• Secure health coverage: All Californians will be required to have health-insurance coverage. Coverage must be substantial enough to protect families against catastrophic costs.

• Guarantee coverage: Insurers will be required to guarantee coverage so that all individuals have access to affordable products.

• Encourage personal responsibility for health and wellness: Implement "Healthy Action Incentives/Rewards" programs in both the public and private sectors to encourage the adoption of healthy behaviors.

• Provide low-income individuals affordable coverage: Very low-income Californians will be provided expanded access to public programs, such as Medi-Cal. Lower-income working residents will be provided financial assistance to help with the cost of coverage through a new state-administered purchasing pool.

• Increase Medi-Cal rates significantly: Increase Medi-Cal reimbursement rates for providers, hospitals and health plans.

• Improve insurer and hospital efficiency: Require health plans (HMO's), insurers and hospitals to spend 85 percent of every premium dollar on patient care, practically capping insurers’ profitability at 15 percent.

• Enhance tax breaks for individuals and employers for the purchase of insurance: Align state tax laws with federal laws by allowing persons to make pre-tax contributions to individual health-care insurance Health Savings Accounts, as defined by the IRS Section 125 Plan.

• Contribute to the cost of coverage: Increased Medi-Cal rates and eliminating the uninsured will direct $10-$15 billion in new money to hospitals and doctors. Doctors, in turn, will be required to pay 2 percent of their revenues back to the state. Hospitals will be required to give 4 percent back to help cover the increased Medi-Cal rates. Employers of 10 or more (small businesses, which make up 80 percent of California business, are exempt) who do not provide coverage will pay an "in-lieu fee" of 4 percent of payroll.

According to an advisory from Schwarzenegger’s office, insurers would not be allowed to charge anything they want for premiums or refuse coverage. “Insurers will be required to guarantee coverage so that all individuals have access to affordable products,” the advisory says. “Californians will no longer live in fear of losing their health coverage.”

Of course, the devil will not only be in the details of Schwarzenegger’s final plan, but also in the upcoming negotiations that will certainly include the powerful—and very rich—insurance companies, like Blue Cross of California and its influential lobbyists, who have made tremendous campaign contributions to both parties, including the governor (see www.arnoldwatch.org).

Furthermore, it remains unclear how affordable this health plan will be—a thorny point with some who note that $2,000 in annual premiums with deductibles as high as $5,000 for working families cannot be considered affordable healthcare.

However, the adoption of mandatory coverage in the final proposal would be considered a great achievement since it would result in coverage of persons infected with HIV or living with AIDS or other pre-existing conditions. One gay legislative analyst told IN that mandatory coverage could also help transgender individuals who otherwise struggle securing health-insurance coverage.

But Schwarzenegger is not the only one with a health-care plan. The California Nurses Association (CNA) is among those who think the governor should support a single-payer bill such as SB 840 by Sen. Sheila Kuehl (D-Santa Monica), which he vetoed last year. "If the governor is truly committed to a goal of universal coverage, effective cost controls and improving the quality of care, he should join us in supporting a single-payer system, the only way to achieve those goals," says CNA.

In a Jan. 10 essay, Kuehl warned that the governor’s proposal has a lot of gifts for the insurance industry without really addressing the problem of affordable health-care and access to the health system.

“The proposal would allow, and even encourage, the proliferation of bare-bones plans with deductibles as high as $5,000 as well as requiring patients to spend an additional $7,500 for procedures refused by their insurance company,” Kuehl wrote. “Bare-bone” plans, also known as “junk health” plans, are plans introduced over the last four or five years by the insurance industry offering coverage at low premiums with high co-pays, rejecting payment for a substantial amount of procedures, canceling policies and refusing to pay for procedures even though they were approved in advance.

Another problem Kuehl points out is that the governor proposes taking money now paid to hospitals to treat indigent people, and redirecting it to private insurers to buy insurance for the poor. “This creates an immediate problem for hospitals, which are already closing at alarming rates due to inadequate reimbursements from private insurance companies along with the cost of caring for the uninsured.” Kuehl wrote.

In a second essay on Schwarzenegger’s health-care plan, distributed on Jan. 16, Kuehl raised additional serious concerns, such as the lack of real cost-control measures and the lack of regulation over the cost of premiums health plans can charge people seeking coverage—one of the pivotal parts of the governor’s plan. Kuehl also questioned some recent revisions to the originally released plan, specifically, changes to the section that calls for mandatory coverage for all.

The governor, Kuehl wrote, “called for more ‘flexibility in insurance underwriting’ and repeal of ‘excessive government regulation.’ This means he would like to roll back even the most minimal requirements now in the law for coverage but still require everyone to buy policies and pay whatever premiums are charged.”

To read Kuehl’s entire essays comparing her single-payer bill, which she will reintroduce this year, to the health-care plans proposed by Schwarzenegger, Senate Pro Temp Don Perata, and Assembly Speaker Fabian Nunez, go to dist23.casen.govoffice.com. To see a short film on Kuehl’s single-payer bill, go to www.onecarenow.org.

In a statement analyzing the governor’s proposed budget relating to HIV/AIDS, AIDS Project Los Angeles Executive Director Craig Thompson praised the governor’s health-care plan with its sweeping reforms to reduce the number of uninsured Californians and contain burgeoning health-care costs. The state, Thompson said, “would continue to save health-care dollars in the long run if HIV/AIDS funding were increased to keep pace with the epidemic.”

About 60,000 people are living with HIV/AIDS in L.A. County, and while infection rates have stabilized nationally at around 42,000, gays and people of color have experienced dramatic increases in new infections. Preventing new cases of HIV will save money that the state would otherwise spend on treating people with HIV/AIDS. Indeed, APLA Director of Government Affairs Phil Curtis, told IN, “Failure to increase prevention funding now will cost California and the country much more in the long run.” For APLA’s budget analysis, go to www.apla.org/news/news.html.

To express your opinion, e-mail your state representatives through www.legislature.ca.gov.