THE BLOG
09/05/2007 10:10 pm ET | Updated May 25, 2011

California's Unhealthy Bill: Fake Healthcare Reform A Victory for Schwarzenegger -- And a Boon for Insurance Companies

In alliance with Gov. Arnold Schwarzenegger, Democratic leaders of the state Legislature, led by Assembly Speaker Fabian Nuñez are rushing to enact a substandard health reform plan that will not reduce the health insecurity of California families.

They're apparently even willing to jeopardize Sen. Barbara Boxer and their own party's slim hold on the United States Senate along the way.

Here's the deal: Nuñez and some other Democrats are actively working with Schwarzenegger to put together a "compromise" healthcare package.

Schwarzenegger, the main architect of that plan, gets to claim credit for supposedly solving the state's healthcare crisis using "bipartisan consensus." As collateral damage to Democrats, Schwarzenegger can tout this deal to boost his candidacy against Boxer in 2010.

Nuñez could then get the governor's support for extending his term as speaker.

This constellation of events may be dandy for a career politician or two, but it leaves behind a lot of other Californians, who will have to contend with a poor healthcare bill full of holes.

AB 8
does nothing to rein in rising insurance premiums -- up 87% nationally this decade -- or rising co-pays, deductibles and other health fees. Which means that costs, already unaffordable for far too many, would continue to spin out of control.

The bill fails to limit rising prescription drug costs, especially notable at a time when Schwarzenegger has just eliminated funding for his "voluntary" drug price restraints that were so ballyhooed last year by the governor and the authors of AB 8.

It is not universal, as many of the currently uninsured would remain without access to care. It fails to assure uniform, comprehensive benefits, and therefore perpetuates an increasingly multi-tiered health system based on the ability to pay.

It fails even to require insurance companies to provide insurance. They would not have to offer coverage to those with serious medical conditions -- those people would instead be dumped into a publicly funded high-risk pool, earning big insurance companies millions in additional profits while bankrupting the public pool with the sickest, costliest patients.

The bill does not even protect patients' choice of physicians, hospitals or other providers.

And, most critically, the plan reinforces and expands an insurance-based system -- the source of much of the present crisis -- thereby subverting real reform for years to come.

At the center of the plan is a mandate on businesses to either provide health coverage or pay taxes into a fund to buy it for their employees. The new tax would fall between the 7.5% of payroll costs favored by Nuñez and the 4% Schwarzenegger proposes.

No matter where the compromise figure ends up, it will be far less than many employers now pay for health benefits. One-fourth of all California businesses that provide health benefits currently pay more than 15% of their payroll for health premiums, according to the California Healthcare Foundation. As a result, businesses that now provide health coverage to employees would have an incentive to drop it.

Moreover, the mandate on employers is unlikely to survive a legal challenge; a similar Maryland bill was thrown out by the federal courts for violating federal benefits law.

Schwarzenegger continues to push his proposal to force most uninsured people to buy insurance or face severe penalties. So far, Democrats have resisted this proposal, but many expect them to accept some form of individual mandate as the final price for Schwarzenegger's blessing for the term limits initiative.

Last year, Democrats united behind SB 840, a single-payer-style, enhanced "Medicare for all" bill that would have provided guaranteed healthcare for everyone, controlled costs, eliminated co-pays and deductibles, guaranteed choice of provider, and gotten the insurance companies out of the way.

Similar systems are succeeding in every other industrialized democracy -- including Schwarzenegger's homeland, Austria. If the politicians in Sacramento are concerned about patient care, they will not now settle for a bad healthcare bill that will further degrade our healthcare safety net. A bad healthcare bill is worse than no bill.

Deborah Burger, RN is president of the California Nurses Association.