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Landmark Health Legislation a Quirk of Timing

Landmark Health Legislation a Quirk of Timing

By HOWARD FINE

Staff Reporter

When state Sen. Jackie Speier introduced a two-page bill a year ago that would establish employer-mandated health coverage, barely anyone noticed and those who did gave it scant chance of passing. After all, a long line of well-intentioned reform bills has run aground over the years.

But in this topsy-turvy political year, strange things have had a way of happening in Sacramento: a budget deficit far greater than what had been anticipated, a recall movement that came out of nowhere, a movie actor who unexpectedly entered the race to unseat Gov. Gray Davis, and a federal appeals court panel delaying, at least as of late last week, the Oct. 7 recall vote.

Speier’s bill was yet another example of these unlikely times.

If Davis signs the landmark legislation into law as many assume he will California will become only the second state to require employers to pay for health care for their workers.

“There have been attempts to get something like this through since Earl Warren was governor 50 years ago,” said Senate President pro-tem John Burton, who became a major force in SB 2’s final passage. “I’m elated it looks like it’s finally about to happen.”

The employer health mandate was helped along by a series of extraordinary forces, including an unusual alliance between the medical community and labor and a last-minute letter from an influential group of agricultural business organizations. At the right moments, these and other factors gave SB 2 the push necessary to keep it from meeting the same fate as dozens of predecessors.

“The stars aligned in a lot of different ways for this to happen,” said Anthony Wright, executive director of Health Access, a coalition of consumer groups that is pushing for universal health care.

Guiding the legislation

Burton’s role as the bill’s principal joint author was key, especially in the final days of the session. It guaranteed passage in the state Senate and greatly boosted its chances to clear the Assembly.

The San Francisco Democrat is widely regarded as the most powerful legislator in Sacramento since the days of former Assembly Speaker (and now San Francisco Mayor) Willie Brown. One reason: term limits. Leadership in the Assembly had turned over several times, making the Senate an increasingly important chamber.

An old-school liberal, he has also shown himself to be a forceful and masterful leader of the Senate, moving the body to the left in recent years. As a result, he clashed frequently with Davis, who adopted a more centrist stance during his first term. Tensions between the two went on display after the 71-year-old Burton showed up late to Davis’ 2002 State of the State Address.

“He’s looking to create a legacy and this bill would be quite a capstone for his career,” said Richard Costigan, a lobbyist for the California Chamber of Commerce, which fought SB 2.

Burton acknowledged the tug of posterity, calling the measure “one of the best things I’ve ever done for the people of California.”

Labor’s involvement added another important element.

“There was a realization that our health care system was near implosion and that some 700,000 Californians most of them working families were slipping into the ranks of the uninsured each and every year,” said Art Pulaski, executive secretary and treasurer of the California Labor Federation.

Even with such powerful backing, nothing in Sacramento is a slam-dunk, especially when it comes to health care. Saddling employers with an additional financial burden when they already faced soaring workers’ compensation costs wasn’t a formula for legislative success.

What’s more, insurers have resisted almost all previous attempts at health care reform, both in California and nationwide.

“Everybody remembered what the insurance industry did to the Clinton health plan,” said Beth Capell, lobbyist for Health Access. She was referring to the industry’s “Harry and Louise” ads that galvanized opposition to former President Bill Clinton’s plan in 1993-94.

Insurer’s support

But times have changed. The number of uninsured Californians had climbed steadily over the years, placing intense pressure on the state’s public health system. Earlier this year, the top executives of two insurance giants Blue Cross of California and Kaiser Permanente broke ranks with fellow insurers by acknowledging that something needed to be done to cover the uninsured.

“Unlike past efforts, insurers did not oppose the Burton bill,” Capell said. “They ranged from what I would call a nervous neutrality to moderate support.”

Burton’s bill had two other advantages over rival health care bills.

Unlike one authored by Sen. Sheila Kuehl, D-Santa Monica, which would have set up a government-run universal health care system, this employer-funded bill would not be a drain on the treasury. (Employees would also bear some of the cost.) Insurers liked Burton’s bill better because it wouldn’t present them with any radical changes.

Garnering support from the various forces with an interest in the bill or at least neutralizing them was crucial to passage. In Sacramento, explained Wright, major legislation where powerful interests collide requires sponsors to “get the support of all but one interest group and then push it through.”

On workers’ compensation reform, the group that took the biggest hit was outpatient surgery centers. With SB 2, it was the business community, namely the California Chamber of Commerce, the California Manufacturers and Technology Association and the California chapter of the National Federation of Independent Business.

Even within those groups, opposition was not universal, according to several lobbyists. Many employers who already provide health care coverage saw the bill as leveling the playing field, forcing companies who had gained a competitive advantage by foregoing health insurance coverage to begin paying up.

In ordinary times, putting together a coalition like the one required for SB 2 might take longer than a year. That’s why Speier and others reintroduced the legislation at the outset of a two-year session, and why opponents typically try to turn objectionable measures into “two-year bills,” with the hope of taking the momentum out of the effort.

But the recall changed all this. The prospect of having Davis being replaced with a Republican forced Democrats in the Legislature to get everything on their agendas through.

“We knew that it was going to come to a head this year,” the chamber’s Costigan said. The chamber and other business groups did succeed in winning some concessions, such as extending the phase-in period and raising the employee thresholds for businesses included in the mandate.

Tie to workers’ comp

Burton early on had linked passage of this bill to workers’ compensation reform, saying that with the savings they reap employers should return the favor by providing health care coverage for their employees. Although this link was never put into formal language, Burton intended it to spur SB 2 forward, by hitching its fate to something that everybody knew had to get passed this session.

A key issue involved estimated savings from workers’ comp reform. Proponents put the number at between $5 billion and $6 billion a year, while employers put out more conservative projections of $1 billion to $2 billion. This difference was crucial, since proponents of SB 2 said that the cost of their bill to employers would be in the range of $2 billion to $3 billion (Opponents have put the cost as high as $7 billion).

“A lot of legislators were very concerned about this and didn’t want to move on the health care front unless substantial progress was being made on workers’ comp,” said Daniel Zingale, former chief of the state’s Department of Managed Health Care who is Davis’ cabinet secretary and point person on health care.

During the last week of the session, a group of about a half-dozen moderate Democrats mostly from the Central Valley held out on their support of SB 2 to see what assurances they could get about the savings in workers’ compensation.

That’s when labor began its final push. Both Pulaski and Tom Rankin, president of the California Labor Federation, could be seen going door-to-door, trying to secure votes from Democratic lawmakers. Even John Sweeney, president of the nationwide AFL-CIO, made calls to key voters.

Despite this full court press, supporters could count on only 38 of the required 41 votes needed in the Assembly.

What pushed SB 2 over the top was a letter delivered to the floor of the Assembly at 10 p.m. on Sept. 12, three hours before the end of the legislative session. It came from several agricultural employer groups in the Central Valley, including the California Grain and Feed Association, the California Seed Association and the Pacific Egg and Poultry Association, which declared their neutrality on the bill after earlier opposing it.

“These agriculture interests were very concerned about another bill that would have ended certain tax exemptions,” said Steven Thompson, a lobbyist for the California Medical Association. “When that bill didn’t come up for consideration as the final day was nearing its close, that’s when they sent the letter.”

The letter prompted three or four moderate Assembly Democrats to come on board, Thompson said. “They saw that not all businesses were opposing the bill,” he said.

A few hours later, SB 2 garnered 46 votes in the Assembly, a virtual party-line vote. Assembly Republicans made a last-ditch effort to bring the bill up again, but they were turned back. Finally, at about 1 a.m. on Sept. 13, it was over. And, for the first time in 50 years, a bill mandating that many of the state’s employers pay for health care was headed for the governor’s desk.

“Once the bill was passed, there was a big sigh that went up from the chamber,” Pulaski said. “People had recognized the significance and the historic importance of what had happened.”

Health Bill Timeline

Date Event

Summer 2002 State Sen. Jackie Speier, D-San Leandro, introduces bill that would require employers to provide health care coverage for workers.

December 2002 Speier reintroduces the bill, now called SB 2.

January 2003 State Senate President pro-tem John Burton agrees to become the bill’s principal co-author.

August 2003 Qualification of recall election for the Oct. 7 ballot.

Sept. 8-11, 2003 Moderate Democrats balk on support for bill, concerned that savings from workers’ comp reform won’t offset costs. Labor makes all-out push.

Sept. 12, 2003 In final hours of session, Central Valley agricultural businesses send key letter signaling neutrality on SB 2; Sept. 13 2003 Gov. Davis gets bill. Has until Oct. 12 to sign or veto.

Howard Fine

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