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State Senate approves Democratic health care bill

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Contra Costa Times

SACRAMENTO — A leading Democratic health reform proposal cleared its first hurdle Wednesday as two new influential studies fueled an intensifying debate over extending health insurance to all Californians.

The state Senate Health Committee approved the Democratic compromise health care reform bill, AB 8, on a 7-4 party-line vote, despite misgivings even from those who supported it.

One of the state’s most influential unions, the California Labor Federation, said it was concerned whether the bill would rein in out-of-pocket costs for employees. Another union, the California Nurses Association, accused Democratic leaders of caving in to Gov. Arnold Schwarzenegger to carry his support for a ballot measure to adjust term limits.

Businesses, meanwhile, appeared unanimous — and in unison with Republicans — in opposing the bill, saying it would kill jobs and wreak havoc on the economy.

“This would double what we pay for medical insurance,” said Jeannine Montoya, who owns two heating and air conditioning companies. “That will kill the entrepreneurial spirit we have in this state.”

A new University of California-Berkeley study challenged that assumption, while another study released Wednesday suggested that employer-provided coverage continues to erode even while health care costs go up for workers.

Still, Alan Zaremberg, president of the California Chamber of Commerce, called the Democratic bill a prescription for continued budget deficits, increased taxes, higher health insurance premiums and fewer jobs.

“AB 8 simply imposes an illegal tax on employers who can’t afford to purchase health insurance,” he said.

Assembly Speaker Fabian Nunez, D-Los Angeles, said he preferred the single-payer, publicly financed health care bill he shepherded through the Legislature last year, only to see it vetoed by Schwarzenegger. But, he said, the reality of a pro-business governor limited his choices.

“There are too many problems in our health care system to wait to come up with the perfect solution that everyone could support,” Nunez said.

AB 8 would require employers to pay 7.5 percent of payroll toward health insurance but would not require residents to purchase health insurance or insurers to provide coverage regardless of health status.

In contrast, Schwarzenegger’s more ambitious proposal, announced in January, would require employers to spend about 4 percent of payroll on health insurance for workers. Insurers would be forced to cover all Californians regardless of their health, and citizens would be required to purchase basic health insurance.

Employers typically devote about 8 percent of payroll toward employee health care, research has shown.

Legislative leaders expect to send the bill quickly to the governor, but it first must go through the Senate Appropriations Committee before it lands on the Senate floor. It then requires an Assembly vote before it lands on the governor’s desk.

After reviewing the projected economic impact of the governor’s proposal and AB 8, UC Berkeley researchers concluded that neither plan will cause the job losses in California that business lobbyists have predicted.

Most firms will see little if any change in their operating costs after an adjustment period, researchers predict.

The governor’s proposal would, in the short term, raise business’ operating costs about one-tenth of a percent, while the Democratic proposal would raise those costs by about six-tenths of a percent, the researchers said.

Both plans would improve worker productivity as healthier, insured employees take fewer sick days, the researchers concluded.

“This should allay concerns that either of the plans will have any negative impacts on the economy,” said lead researcher Ken Jacobs, chairman of UC Berkeley’s Center for Labor Research and Education.

Schwarzenegger was on hand Wednesday for the release of a second study, by UCLA researchers, that showed that an estimated 6.5 million Californians, 20 percent of the state’s population, were uninsured for all or part of 2005.

That uninsured rate is slightly lower than the nearly 22 percent rate in 2001, but the researchers said job-based health insurance is declining, covering about 2 percent fewer workers in 2005 compared to 2001. Employer-provided health insurance for the working poor declined more precipitously.

Slightly more than half of California’s workers now get insurance through their jobs. Government-funded health care is making up the difference, researchers said. Workers’ out-of-pocket health costs continued to spiral, rising about 66 percent from 2001 to 2005.

“All this points out once again that we need comprehensive health care reform that insures everyone and guarantees all Californians have access to affordable and reliable care,” Schwarzenegger said.