To many observers, the buzz of activity in so many state legislatures is a clear signal that frustrated governors and local lawmakers are losing faith in the federal governments ability to solve the problem. As the ranks of the uninsured continue to grow in the worlds richest nation, increasing by nearly 7 million Americans since the turn of the century, state lawmakers have apparently concluded that they no longer can afford to wait for Washington.
People havent seen this type of effort on the federal level, and theyre not willing to sit back any longer, said Robert Doherty, senior vice president for governmental affairs and public policy at the American College of Physicians. They see the problems this causes on the local scene, and they feel its their responsibility to do something.
Already this year, special commissions or task forces to study plans to expand healthcare coverage have been created in at least nine states, including California, Colorado, Louisiana, New Mexico, North Carolina, Maryland, Minnesota, Ohio and Wisconsin, according to Richard Cauchi, director of health programs at the National Conference of State Legislatures, which tracks legislation in all 50 states. About 15 others are also moving forward on the issue.
Its very clear that substantial movement on healthcare insurance is in the air and in the news, Cauchi said. Theres a lot of energy on a state level. Part of it is state legislatures looking at what Massachusetts and Vermont did last year. Theyre not jumping onboard to try to duplicate that, but digesting the idea of increasing coverage and pondering the concepts. Theyre asking, Can we also do something more substantial? And theyre concluding that its worth a try.
In California, Schwarzeneggers comprehensive plan, which must be approved by the Legislature, requires all residents to purchase insurance and also imposes taxesor dividendson the provider community, a powerful lobbying force in the state capital of Sacramento.
Physicians would be levied a tax of 2% of their gross earnings, while hospitals would have to pay 4% of total revenue to the state. Those fees, however, would be at least partly offset by an additional $4 billion increase in annual payments from Medi-Cal, the states Medicaid program. Meanwhile, insurers would be required to spend 85% of every premium dollar on patient care, while employers with 10 or more workers would be forced to spend at least 4% of payroll to offer medical-care coverage to their employees.
Everyone in California must have health insurance, the governor declared.
Despite the strict limits on profits for insurers, the plan could prove to be a giant blessing for this sector.
In California alone, the market for insurers could potentially grow by about one-fifth of the states total population, a huge new pool of customers for any business segment. But the standard bottom line for insurance companies is just one part of the equation, which includes the overall economic benefit that will come from reducing the amount of money that individuals with insurance must pay to underwrite care for the uninsured, said Karen Ignagni, president and CEO of Americas Health Insurance Plans, the industry trade group that rolled out its own comprehensive plan for universal coverage in mid-November.
The price of this cost-shifting, she says, amounts to about $50 billion a year in increased premiums for insured families. A June 2005 study by Families USA found that costs to cover healthcare for the uninsured added $922 to premiums for employer-provided family health insurance. That number is projected to rise to about $1,500 by 2010. In California, according to a report by the New America Foundation, a nonpartisan think tank, this cost-shifting added $1,186 to the price of premiums for family health insurance in 2006.
When we talk in terms of economics, Ignagni said, its a lost opportunity to be the only country that hasnt embraced (coverage for all citizens). What motivated us (to push for universal coverage) was the amount of cost shifting that employers and consumers have to sustain because of the nations inability to confront this challenge.
It didnt take long for Schwarzeneggers proposal to stir opposition, of course. Officials with the 35,000-member California Medical Association said the 2% tax on physicians serves as little more than a penalty on providers, jeopardizing the future of a fragile healthcare system and potentially limiting the very access to care it was supposed to provide.
We are certainly in opposition to the 2% provider tax on doctors, said Anmol Mahal, president of the California Medical Association. We feel its an unfair way of funding the healthcare needs of California.