A year can sure make a difference.

This time last February, state Sen. Sheila Kuehl was launching another seemingly quixotic quest to fix the state's ailing health care system by offering a California version of the socialized medicine predominant in Canada and Great Britain.

Its passage by the Democratic-controlled Legislature prompted an expected veto by Republican Gov. Arnold Schwarzenegger.

But in 2007, health care reform is the cause c & #233;l & #269;bre from Sacramento to Washington D.C., with Schwarzenegger unveiling a $12 billion market-based reform plan. His plan even includes a requirement that employers either provide health coverage or pay a fee the kind of mandate anathema to Republican lawmakers. Competing with it are proposals from the Senate and Assembly's top Democrats. And even President Bush in his State of the Union address included modest though controversial proposals for change on a national scale.

At this point, several L.A. business leaders have all but conceded that some measure of health care reform is on its way.

"We believe there's finally a collective will to pass something and to take some steps forward," said Los Angeles Area Chamber of Commerce President Gary Toebben, who has been entertaining a succession of state politicians in his office eager to explain the merits of their respective plans.

Kuehl, (D-Los Angeles), who will be a key gatekeeper in the debate as chairwoman for the Senate Health Committee, is philosophical about the reality that whatever reform package passes will likely fall short of her dream. She's introduced another single-payer bill but acknowledges there's more momentum for a market-based approach.

"Out of the conference committee I would hope there would be something that would move us along toward universal health care," Kuehl said. "I haven't seen any plan, except for mine, that actually achieves this in an affordable way that preserves quality and choice. The alternatives all give up one thing or another that preserves the profit and administrative overhead costs for the insurance industry."

Kuehl's approach would have virtually shut the nation's private health insurance industry out of one of its most lucrative markets, and given the government tremendous leverage to negotiate cost concessions from drug companies and providers.

Schwarzenegger's plan requires all Californians to obtain insurance through private companies or public programs. Employers of 10 or more people would be required to either offer health coverage or contribute to a statewide pool that would subsidize coverage for low income residents.

Medi-Cal and Healthy Families would be expanded to help provide coverage to low- and moderate-income residents. Hospitals and doctors would be assessed what has been characterized either as a fee or tax based on revenues.

The plan would be funded with $5.4 billion in anticipated new federal funds, $3.5 billion from hospital and doctor assessments, $1 billion in employer fees, and a $2 billion shifting of money from state funds.

"We want to make sure that everyone is insured. What is also important for us is to reduce the costs of health care insurance and to make everyone responsible to have their own insurance, and to spread the costs and for everyone to make an effort in order to get this done," Schwarzenegger said at a Sacramento press conference last week.

Proposals advocated by Assembly Speaker Fabian Nunez (D-Los Angeles) and Senate President Pro Tem Don Perata (D-Oakland) include a similar "play-or-pay" approach for employers, but Nunez's version lacks an individual mandate.

Senate Republicans head in the opposite direction, with no employer or individual mandates and no new funding for health care other than re-directing existing funding sources.

State money that now goes to compensate hospitals that treat the uninsured, for example, would instead be directed to helping them build community clinics that would serve as an alternative to emergency rooms for routine care. Employers would receive tax credits to offer coverage. Doctors would receive tax credits for treating MediCal patients, in an effort to overcome a severe shortage of doctors willing to care for the poor.

Individuals would more easily qualify for tax-advantaged Health Savings Plans that would help them cover the gap in low-cost, high-deductible plans. Insurers would be relieved of some minimum coverage mandates that might enable them to offer lower cost plans.

"The Republican plan recognizes the fact that taxpayers cannot afford insurance for everyone, but we can certainly provide access for everyone in need," said Sen. Sam Aanestad, R-Grass Valley, in a press release announcing the plan last week.

That's an approach that Kuehl and consumer health advocate Anthony Wright characterize as a "race to the bottom," at a time when the rest of the country will be closely watching what California does.

"In California we have the biggest problem of any state, with Los Angeles often considered Ground Zero of the uninsured problem in America," said Wright, executive director of Health Access California, who participated in a health care panel organized by the governor's office. "If we can do it here, they can do it anywhere."

Any bill crafted from the best of proposals out there will face significant political and legal potholes. Chief among them is the debate over whether Schwarzenegger's employer and doctor and hospital assessments are actually fees or taxes. A tax would require two-thirds approval by the Legislature.

Small business groups who led the successful 2004 repeal of SB 2, the state's last attempt at imposing an employer mandate for health coverage, promise a similar fight over all the mandates in the governor's plan.

Toebben notes that while larger chambers like his might be supportive of the governor's aims in this instance, charactering as a fee what many people would consider a tax sets a disturbing precedent that could be abused by future lawmakers.

Some legal experts also say the employer mandate could be challenged under the federal Employee Retirement Income Security Act (ERISA), which restrict state laws that deal with employee benefit plans.

Citing ERISA, a federal appeals court last month invalidated a new Maryland law mandating a greater health care investment by employers with more than 10,000 workers.

The law was widely perceived as targeting Wal-Mart Stores Inc., the only company in the state of that size. The Schwarzenegger administration contends the governor's proposal shouldn't be affected by the ruling since it does not single out a company or mandate a specific level of benefits.

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