Schwarzenegger’s plan is an insurance industry give-away

Experts: Schwarzenegger’s Plan, Industry Give-Away

Truthout, Sept 21, 2007, by Jason Leopol

California Governor Arnold Schwarzenegger’s $12 billion health care plan is a flawed piece of legislation that would place an enormous financial burden on low-income families and individuals while enriching the coffers of the country’s largest insurance companies, opponents of the plan said Thursday.

A news story on Schwarzenegger’s proposed universal health care package for Californians, reported in Truthout on Thursday, generated an enormous response from readers residing in California and organizations, such as the California Nurses Association, who took issue with Truthout’s report because they felt it did not address the inherent problems associated with Schwarzenegger’s proposal if it becomes law.

“The problem with Governor Schwarzenegger’s health plan is that it requires all individuals to carry health insurance,” and pay a $5,000 deductible, wrote a California reader in response to the story Truthout published Thursday. “Mr. Schwarzenegger’s plan does not address the very real needs of working class individuals.”

Moreover, our report did not address a competing Senate bill, SB840, the California Health Insurance Reliability Act, sponsored by state Senator Sheila Kuehl, which has been touted by Democratic activists and independent industry organizations as a better alternative to the governor’s proposal because it would save the state $12 billion and place power in the hands of the individual instead of the insurance companies.

Under SB840, patients would be able to choose their own doctors; doctors would remain private, able to practice the way they want, paid fairly and simply on a fee for service basis; and California would save billions of dollars,” wrote Ann Troy, a medical doctor, in the journal California Pediatrician earlier this year. “Instead, the Governor has come up with a plan that would keep the insurance industry in health care-to the detriment of us all.”

Schwarzenegger, who has called a special session of the legislature in hopes of hammering out a health care reform package, vetoed SB840 claiming it does not go far enough. However, the legislature may take up the bill again next year. A spokesman for Schwarzenegger did not return calls for comment addressing the issues raised by Truthout readers.

Esther Blau, a registered nurse who resides in Marin County, wrote in to Truthout to say that the real solution for Californians is a “single-payer” universal health care package, a piece of legislation passed by the state senate and assembly, but vetoed by Schwarzenegger who opposes the single-payer plan.

Schwarzenegger’s proposal “would take up to 15 percent of our health care dollars to put into the pockets of insurance companies,” Blau wrote in an email. “State Senator Sheila Kuehl’s single-payer health care bill, Senate Bill 840, removes the insurance companies … and makes health care accessible and affordable.”

Addressing the state Senate September 10, Kuehl said legislation aimed at overhauling health care will fail until “we squarely face the fact that premiums imposed by the insurance companies are rising three to four times faster than wages every year, all the reforms that keep those insurance companies firmly in place are doomed to failure.”

“I continue to believe that the movement that’s been building for single payer, a movement that has seen support for a single payer universal health care system more than double over the last six months alone, will continue to build in ’08 in’09 in 2010,” Kuehl said. “Then, with a new governor, perhaps there might finally be a chance to get a signature on the bill that is actually the best solution for businesses, for employees, and for all the people in California. Because if you take the insurance companies out of the system, and they are the only entity that adds no value at all to the provision of health care, the overall costs for health care in California drop $19 billion in the first year alone, simply because we’re finally not paying their inflated overhead and profit.”

The California Universal Health Care Organizing Project said the difference between SB840 and the Schwarzenegger-Nunez plan, is the removal of the “middle man insurance industry from health care and bargaining vigorously with the drug companies.”

Schwarzenegger’s plan, on the other hand, calls for using state funds and implementing new taxes to subsidize the insurance industry, the organization said, and forces individuals to carry the burden of a $5,000 deductible and a maximum $10,000 deductible for families. It also requires all Californians, including children, to have at least minimum health care coverage, but fails to answer how low-income families and individuals will pay for mandatory coverage.

We do not want welfare for the insurance industry which has always tried to avoid the sick and insure only the healthy,” the group said in January when it came out in support for SB840. “The insurance industry should be removed from health care. [Schwarzenegger] maintains the current bureaucratic nightmare of over 6,000 health insurance plans and 69 government programs. SB840 is a bureaucracy buster as it reduces the bureaucracy from 6000 to 1. Most politicians want to cut bureaucracy…. SB840 is the biggest bureaucracy buster in history.”

Among the state groups that oppose the plan endorsed by Schwarzenegger and the state’s Democratic Assembly Speaker Fabian Nunez are the California Nurses Association, California School Employees Association, California Physicians Alliance, League of Women Voters, and the public. Recent polls show support for the Schwarzenegger-Nunez approach is plummeting while increasing numbers of people support genuine reform – single payer.

Charles Idelson, the communication director for the California Nurses Association, the union representing registered nurses, said he is under the impression that Californians believe neither Schwarzenegger nor Nunez are truly “leading the way to genuine reform in California.”

Their plans are both a giveaway to the big insurers and will do virtually nothing to increase health security for Californians,” Idelson said in an email.

Last week, the state Assembly and Senate passed a so-called compromise bill, AB8, which Schwarzenegger said he would veto. Idelson’s organization, and Senator Kuehl, also opposed that bill. The special session appears to be working on a new piece of legislation that will adopt some of the measures included in AB8.

The California Nurses Association said AB8 is flawed because it “has no controls on rising costs of premiums” and “has no limits on rising drug costs.”

Last year, the California legislature passed a Schwarzenegger-backed bill for “voluntary” price controls by the drug companies, but this year Schwarzenegger cut from the state budget all the funds to implement even the voluntary controls,” the organization said in its review of the legislation.

Furthermore, AB8, and the plan Schwarzenegger is now proposing, “has no minimum standard of health benefits for employees who are over 300% of the poverty level (i.e. most union members),” the union said. “What will likely happen is those people will end up with junk insurance – high deductible plans with low standards of covered benefits, and costs that will continually rise. It contains a false promise of requiring insurance companies to cover everyone. In fact, the bill has a huge loophole that will allow insurance companies to dump people with “serious medical conditions” into a public pool that will probably be bankrupted by having to pay for the sickest patients – while the insurance companies pocket hundreds of millions more in profits by only covering the healthiest people.”

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