California Stages Trial Run for U.S. Health-Care Overhaul

by Lesley Politi on May 21, 2009

California has the 7th highest uninsured rate in the country. Our rates are not the highest in the country but we have very difficult underwriting process.  I see everyday people getting declined from CA insurance carriers for common everyday illnesses.


When representatives of various health industries stood with President Barack Obama at the White House last week and pledged to cut health-care costs, it turns out they were traveling familiar terrain.

Many of those same groups had been through similar discussions about curbing costs in California as that state tried, and failed, to pass an ambitious health overhaul in 2007 and 2008.

“That was very important to all the group,” said Karen Ignagni, president of America’s Health Insurance Plans and a leader in the industry’s talks with the White House. “As a result of that effort, a number of different groups began to talk about what are the lessons of California, and how big a problem the rising health cost curve is.”

California’s experience, in fact, represented a kind of trial run for the health-care overhaul the president and Congress are about to attempt on the national level, offering useful lessons as well as warning signs about the potholes ahead.

Above all, say those involved, the California example showed the importance of securing at least some bipartisan support, the need to reassure those who have insurance as well as those who don’t, and the imperative of showing the public that health-care costs can be tamed.

California’s effort was launched by Republican Gov. Arnold Schwarzenegger in early 2007, a time when there was reason for optimism. Massachusetts, also with a GOP governor and Democratic legislature, had recently managed to enact its own broad health overhaul.

California’s effort was bound to be important; the state has, after all, the eighth-largest economy in the world. It also was bound to be difficult. As, an online site that tracks policy and politics, noted at the time: “California, the nation’s most-populous state, has the seventh-highest uninsured rate in the nation — nearly twice as high as in Massachusetts. In fact, the 6.8 million people without health insurance in California outnumber Massachusetts’ entire population of 6.3 million.”

The California plan, hammered out jointly by Mr. Schwarzenegger and Democratic leaders in the legislature, bore many similarities to approaches now being tried in Congress. It required most individuals to acquire health insurance; subsidized that coverage for many low-income residents; required employers to either provide insurance or pay a fee to the state to help underwrite it; and attempted to introduce cost-control measures on both public and private plans while imposing an increased tobacco tax and other fees to cover costs.

In California then, as in Washington now, the chief executive enlisted insurers, doctors and hospitals to take part, particularly in discussing how to control costs. Many industry players, sensing change was in the air, participated because they preferred to shape the outcome rather than be clobbered by it.

Not all agreed, of course. Some liberals pushed a government-run health plan, while conservatives preferred tax incentives to make it easier for individuals to buy their own coverage. Still, the middle-ground approach moved ahead.

In the fall of 2007, Mr. Schwarzenegger called a special legislative session that produced a compromise health bill. It passed the Assembly but the effort died in January 2008 in a state senate committee.

The two major causes of death were a dearth of Republican support and a declining economy that raised fears both about paying the bill and residents’ willingness to approve the required new taxes.

With the dust now settled, Marian R. Mulkey and Mark D. Smith of the California HealthCare Foundation, an independent philanthropy, have written a lucid analysis of the lessons learned. They cite first of all the need for bipartisanship to change something as complex and controversial as the health-care system. Noting that California’s plan got no GOP votes on the Assembly floor, they write that “the array of concerned stakeholders and complex issues associated with health reform demand broad bipartisanship and compromise across party and ideological lines.”

On the other hand, they note that one reason the proposal got as far as it did was that its authors were careful to reassure those who already had insurance that they wouldn’t be hurt as coverage was extended to those who didn’t have it. That’s one lesson the Obama administration appears to have taken to heart, as seen by the president’s regular insistence that any change allow those happy with their current coverage to keep it.

Ultimately, though, California’s experience shows that success requires convincing lawmakers and citizens that any overhaul will curb costs for all. Ms. Mulkey said in an interview that the attempt to do that was hampered by limits on what any single state can do to corral costs, but also by the fact that supporters spent energy talking about spreading coverage than showing the effort could shrink costs.

In the end, she said, the difficulty in persuading people that costs could be kept down “was the Achilles’ heel.”


I would be nice to see California take all the issues we have with our current system and tweak them. I feel there are a lot of little problems adding up to one big issue. Hopefully California can help.

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