Subject:
Update and Action on Health Care in California
Date: September 13, 2007

ISSUE: Update on health care legislation

ACTION: Contact your state Assembly Member and Senator to support truly universal and affordable health care coverage

BACKGROUND:

Monday, September 10. 2007 both the Senate and the Assembly passed AB 8, the legislation that would have extended health care coverage to all working people in California. We have been actively working on achieving health care that covers all California residents, that is affordable so that both premiums and out-of-pocket expenses do not prevent people from using the coverage they have. AB 8 did not guarantee many of our principles.

More to the point, amendments to AB 8 were introduced the previous Friday, went into print on Saturday, and we found the entire 127-page bill so utterly incomprehensible and fraught with ambiguities that by Monday we had no choice but to OPPOSE it. We asked that at a minimum AB 8 be converted to a 2-year bill so that legislators and the public could at least read it and raise questions. Our request was not heeded.

For political reasons - 'accomplishing health care reform in 2007' - this measure was rushed through and supported in both houses. Votes were largely along party lines, though there were two Senate Democratic votes either in opposition (Kuehl-Santa Monica) or abstaining (Simitian-Palo Alto) and no Republican support at all.

Whether or not California Church IMPACT did or did not support AB 8 is now moot. The Governor announced shortly after passage that he would veto the bill and call a Special Session in which his office and the Legislature would hammer out their differences.

What concerns we had are now magnified. The Governor insists on 'universality' - but that is to be achieved through a mandate that everyone has to have health care insurance whether or not it is remotely affordable. He also insists that the employer contribution be lowered; AB 8 directed that employers contribute 7.5% of their payroll while the Governor wants 4%. What analysis exists on coverage shows that 4% is insufficient to support any system, so the Governor wants taxes on both hospitals and doctors to be paid into the pool.

AB 8 had a fee on hospitals, but the Governor's levy is actually a tax. The difference is that the hospitals' payment in AB 8 would be used to draw down federal matching funds they would receive as a benefit (thus it is a fee since they directly benefit) where the Governor is asking the hospitals to pay a general levy used for general purposes, thus a tax. With no Republican support for either, a tax would need a 2/3 vote it will not get.

So in a most unusual case, the proposal in the Special Session is to pass the policy part of a health care system in the Legislature and go to the ballot for voters to accept a tax. Part of the latter may include business groups' proposal to have a dedicated sales tax to relieve their employer contribution. In other words, you would pay for their employees' health care; they would not.

We are particularly concerned about the mandate. With no controls on premium costs, the insurance corporations will be free to raise rates. AB 8 allowed rate review (not control) every 6 months. An individual mandate, if patterned on the Massachusetts model, would have penalties if you failed to comply. In Massachusetts the first-time penalty for drunk driving is $250. The fine for failing to have health care insurance is $1000. Without premium cost controls, this will be a nightmare for many individuals and families.

Even if the standard to cover all employees is obtained, there is no guarantee of true affordability. In AB 8, people making at or below 300% of the Federal Poverty Level would contribute from 0 to 5% of their income. That appears pretty reasonable for workers who today have no health care at all.

However, it remains problematic that this is truly affordable. Currently the median wage for a family of four in California is $55,000 which is below the level that may be subsidized by a new health care system. For a single individual, 300% FPL is $30,630; for three (one parent, two children) it is $51,510, and for four it would be $61,950. At those levels, premiums likely would be no more than 5% of gross income, subsidized by the state insurance fund.

However, out of pocket costs in AB 8, while limited to $1500 annually, means that in practice a family of four at 300% FPL would pay about $3000 in premiums with the potential for another $1500 in out-of-pocket costs. Since this is based on gross wages, that is a pretty large bite from a median-wage worker's take-home pay.

However, anyone making over 300% of Federal Poverty Level (FPL) and anyone unemployed - those laid off, those with disabilities and not on public assistance, widows, divorced people - may be required to pay whatever they find in the open and unregulated market. The sky is the limit. This is why mandates cannot work.

There are also no restrictions on age, geographic, or health condition discrimination. The current right for insurance companies to charge higher rates for those categories remains in effect. For example, at my age (never mind what that is) premiums would cost nearly 20% of my salary. If I retired north of San Francisco, my age and geography would place premiums out of my reach. And heaven forefend if I get sick and also have to change insurers - I could lose coverage entirely! My situation is quite ordinary. The language in AB 8 did not clearly resolve these issues, and a 'compromise measure' likely will not either.

We agree with covering the uninsured and have worked vigrously for that goal. These proposals fall far short of accomplishing that result.

ACTION:

In sum, we need to continue to press our legislators and the Governor to make health care reform genuine. We need:

-universality through guaranteed access to comprehensive, affordable, and useable coverage
-no mandates
-affordability
-fairness in coverage

These are linked to our faith principles of care for all God's people and belief in equality for all, regardless of who they may be.

There is no reason, other than political capitulation to insurance and business corporations, that puts creating a truly decent health care policy beyond our state's capacity.

These are the messages only we can deliver, and we must be heard. Please contact your legislators and the Governor now and throughout the Special Session. You in the faith community have a special voice that lifts up signficant moral values of the Common Good. Please raise your voice now - and keep speaking!

To contact your legislator, please go to: http://capwiz.com/cachurches/home/.

Because our website is malfunctioning, you may have to re-enter your address, but once you do, your legislators will be available. When you click on their names, it will take you to their legislative home page, and under their photos is a contact link where you may send an email.

Remind your legislators and the Governor that health care reform is for all of us, and is not just a sham that supports the current broken and failing system.

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