12/21/07 6:00 AM

California Health Care Reform Passes Major Hurdle

By Bill Leonard

A comprehensive health care reform bill is gathering momentum in California and, if enacted, could set a precedent for the rest of the nation. On Dec. 17, 2007, the reform package (ABX1-1) passed a major stumbling block when the State Assembly voted 46-31 to approve the bill.

The measure is supported by California Gov. Arnold Schwarzenegger (R), who called a special legislative session on health reform this fall. Schwarzenegger has joined with one of the Assembly’s leading Democrats, Fabian Nunez, to push for passage of the bill. The reform bill passed along party lines with the GOP members voting to oppose the governor’s plan.

If passed, the legislation would require California residents to purchase health insurance and require health insurance vendors to provide coverage to everyone regardless of pre-existing medical conditions. The measure also includes a “play-or-pay” provision that would require employers to either provide medical benefits to their employees or pay into a state-operated health insurance pool.

Some analysts predict that, if enacted, the legislation would provide health coverage to 70 percent of the estimated 6.7 million people in California who are currently uninsured. Even with the Assembly’s approval, the measure still faces several major hurdles. Opposition in the state Senate has been growing, and many of the groups opposing the reform proposal are confident the bill will not pass the upper house.

The Senate should begin debate on the measure in mid to late January, sources say. The groups aligned to support and oppose the bill are each interesting mixes of business and organized labor groups. While some labor groups such as the Service Employees International Union have supported the bill, other organized labor groups, like the California Nurses Association, have strongly opposed the proposal.

Even if the measure passes the Senate, it would most likely still have to be approved by a referendum. Sources say a statewide vote would pose a huge obstacle if California residents believe the proposal could raise taxes and place additional strains on the state’s overburdened budget.

The business and labor groups opposing the proposal also have threatened to draft another reform plan and place it on the ballot for the November 2008 election. Still, Schwarzenegger has expressed confidence that ABX1-1 has the support needed to become law.

Following the Assembly’s vote, the governor told reporters during a press conference that opinion polls show reforming the health care system is a top concern of Californians, and he called the Assembly’s action a “historic and courageous step” in reforming the dysfunctional system.

“I think it was really terrific that they passed this health reform bill, because it really took us one step closer to our finish line,” Schwarzenegger said. “It’s inexcusable that a state that is the Golden State, the best place in the world and a wealthy place, really, that we have a health care system where people have to continuously live in fear.”

Bill Leonard is senior writer for SHRM Online.

Related Articles:

States Respond to Rising Health Care Costs, SHRM Online Workplace Law Library, Aug. 9, 2007

State Lawmakers Weather Storm of Health Care Measures, HR News, Feb. 2, 2007

Expert: California Health Care Proposal Is ‘Extraordinarily Bold’, HR News, Jan. 22, 2007

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