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The 7 Key Questions About the Schwarzenegger/Nunez Health Care Compromise
Date:9/5/2007

on employees?

Your proposal allows employers to provide coverage on their own or to pay into the state pool to provide coverage. We assume the employer cost will be from 4% to 7.5% of payroll, the percentages range in current proposals. If employers' mandatory contributions to health care are capped at substantially less than they pay now, business imperatives will push them to cut benefits or simply transfer employees to the state purchasing pool. In either case, employees would shoulder a larger burden even as health care costs rise faster than their wages.

5. Will Californians in less than perfect health be guaranteed a policy

that they can afford and that provides them sufficient coverage?

We know that insurers want to segregate up to 5% of Californians into a state-administered "high risk" pool that may provide more limited benefits at higher costs.

Currently, the state's high-risk coverage for individuals costs more than private insurance yet has a hard limit of $75,000 in annual medical payments - - roughly the cost of a one-week hospital stay. The governor's plan rightly called for across-the-board "guaranteed issue" of insurance, efficiently spreading risk, yet was silent about what insurers could charge. Speaker Nunez, your last proposal submitted to insurers' segregation scheme.

6. How will your state purchasing pool achieve continuing affordability

to both individuals and taxpayers?

You both have said that the state will negotiate lower rates with insurance companies, at least for the state pool that provides coverage that employers do not. A purchasing pool serviced by the five HMOs and insurance companies that currently control 80% of the market will be subject to cartel- like pricing, highly resistant to negotiation.

Unfortunately, you will lack full leverage in such negotiations unless there is a nonprofit state-sponsored health plan to compete with private insurers. We fear that private insurers
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SOURCE Foundation for Taxpayer and Consumer Rights
Copyright©2007 PR Newswire.
All rights reserved

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