Assemblyman Keith Richman is expected to introduce legislation this week that would require all Californians to have health insurance, another in a series of alternatives to last year’s initiative that was turned down by voters.

The proposal by Richman, R-Granada Hills, contrasts to legislation soon to be introduced by state Sen. Sheila Kuehl, D-Los Angeles, to create a “single payer” plan that would replace private health insurance, as well as existing government health programs.

Meanwhile, supporters of SB 2, the 2004 bill that would have mandated employers to provide health coverage but which was defeated in a November referendum, are considering introducing another version of that bill that would be more palatable to the business community.

“We have been talking about the health care crisis for the last several years but trying to get lawmakers’ attention has been difficult,” said Jan Emerson, vice president of external affairs for the California Hospital Association. “Now I think there is recognition that we can’t turn our heads anymore and we have to deal with it.”

The legislative efforts reflect continued concern that health care inflation, though slowing, continues to outpace both personal income growth and profits. That is expected to cause more employers to eventually drop coverage, adding even more to the record 6.4 million uninsured Californians.

SB 2 was overturned at the polls in November when Proposition 72 was defeated, but it lost by the narrowest of margins less than 200,000 votes despite the governor’s strong objection.

While Kuehl’s bill has little chance of becoming law, and big questions remain about Richman’s proposal, it’s generally acknowledged that significant reform could well emerge from this Legislature. “The problems will only get worse as premiums go up,” said Glenn Melnick, director of USC’s Center for Health Policy and Management. “I don’t think the issue will go away.”

Bi-partisan approach

Richman and co-author Joe Nation, a Democratic Assemblyman from Santa Rosa, announced their bi-partisan proposal last week, but many details will be in the package of eight bills that Richman hopes to introduce this week.

The core concept is to make health insurance a requirement similar to the auto insurance requirement for car owners. That would bring into the system many of the Californians currently uninsured, especially the 2.7 million between ages of 18 and 34.

The proposal tries to control costs by setting up large purchasing pools that both individuals and small businesses could participate in, giving them greater power to extract cheaper insurance from private companies.

Low-wage workers who still couldn’t afford coverage would have their care subsidized through a program that utilizes private and state dollars for matching federal dollars available through existing programs.

Individuals would be able to deduct premium costs from their taxes. Basic coverage would include catastrophic care, but more comprehensive coverage could be added.

The proposal also seeks to enroll the estimated 1.5 million children and parents eligible for the government’s Healthy Families and Medi-Cal programs. “Our plan builds on the current system, and works through private plans,” Richman said.

Initial reaction was guarded last week, given the complexity and dearth of details, but some elements drew support.

Emerson said the hospital association likes the concept of a mandate for individual coverage but wanted more details on financing. The influential California Chamber of Commerce also said it was open to the proposal.

“That is the whole issue with all these proposals: Who is going to pay for it?” said Jeanne Cain, a chamber vice president. “We will look at the impact on the business community.”

The California Association of Health Plans said it will not support the bill if Richman is adamant on expanding taxes on health maintenance organizations to help pay for it. “If that’s the case, we don’t like this bill,” said spokesman Bobby Pena.

Meanwhile, the idea of forcing people to have coverage drew a critical response from Health Access, a health care consumer group. “If people have access to coverage they overwhelmingly take it,” said Anthony Wright, the group’s executive director. “It’s not that people don’t want coverage. The real problem is affordability and exclusions.”

Richman said he was optimistic that the financing mechanism could bring in more government dollars to expand coverage. He added that his bill was the only politically palatable one in play.

“Sheila Keuhl’s plan is not going to go anywhere in the Legislature, and if it does it will not be signed by the governor, and neither will an employer mandate,” Richman said.

Single payer

Kuehl’s plan, which she outlined in January but is not expected to introduced until later this month, would create a massive government program to replace all existing government and private health coverage similar to the Canadian system.

The proposal was given a boost last month when a consulting firm’s analysis of her earlier 2003 proposal paid for by supporters concluded the single payer system could save California $8 billion in its first year and $343 billion over 10 years, largely by reducing administrative waste and corporate profit.

Funding would be through a hodgepodge of new taxes but the report concluded that businesses already paying for health care would see a 16 percent reduction in costs. Businesses that don’t would see costs rise on average $2,990 per worker.

“Half of health care spending in this country is wasted,” Kuehl said. “(Richman’s) plan as I see it does nothing about the high cost of health care. My plan is the only one that saves money in its first year.”

Critics, however, question the analysis by Lewin Group, and both business and major health care industry sectors are adamantly opposed to any single payer system.

“The suggestion that all administrative costs are a waste is just inaccurate and all you have to do is turn it over to the government and all administrative costs will disappear is just inaccurate,” Pena said.

An even a bigger problem for Kuehl is that organized labor appears split on the proposal, with the California Federation of Labor, which represents 1,200 unions and 2 million workers, opposed to it. “The government-run health care piece is something that California voters have not supported,” said Angie Wei, legislative director of the federation.

Kuehl, whose earlier plan in 2003 failed to make it out of the Legislature, said she was disappointed by Wei’s remarks but pointed to the support of over 500 organizations, including the large Service Employees International Union.

Wei said the federation, a sponsor of SB2, may want to propose another version of the bill that would lighten the financial burden on businesses in order to draw the support of business groups.

Several business groups said they remained wary of any version of the employer mandate bill, but the Valley Industry and Commerce Association, which has made health care reform a top priority, remains open to all proposals for now.

“California is taking a look at itself, and health care is one of the major cost drivers for business,” said David Phelps, the group’s legislative director, who expects some kind of health care reform to emerge for the current two-year session. “It will be a step, but it remains to be seen if it’s the right step.”