State Assembly Passes $14B Healthcare Reform Bill

by Rene Villaroman/

THE State Assembly in Sacramento passed the first phase of a $14.4 billion plan to provide medical insurance to almost every Californian on Monday. The achievement gave Gov. Arnold Schwarzenegger and his Democratic allies their first victory in overhauling California’s healthcare system, the Los Angeles Times reported on Tuesday.

The measure, covering an estimated 3.6 million Californians, including 800,000 children, was negotiated by Schwarzenegger and Assembly Fabian Nunez–(D-Los Angeles. It would require almost every California resident to have insurance starting in 2010 with provision on subsidies and tax credits for those who would have trouble paying their share of the premiums.

Having passed along party line (45 to 31 votes), the measure was seen as an important step not only for California but for the Democrats who are crafting a similar measure for the entire country.

While the Governor and his Democratic allies in the Assembly are celebrating their victory, the State Senate is more skeptical about the measure’s survival. If it was passed by the Senate, the bill would still have to muster  significant support when it undergoes a State-wide plebiscite in November 2008. Senate Democratic leaders are questioning the wisdom of funding a measure at a time when California is staring at a projected $14 Billion budget shortfall in 2008.

“California has taken a giant step forward today on something that many people thought could not be done,” Gov. Schwarzenegger said. “With the Assembly’s courageous vote…we are closer than ever to fixing our broken healthcare system.”

Speaker Nunez said it was no surprise the plan had been so hard to forge.

“Otherwise, in the last 90 years you would have seen a successful attempt at fundamentally reforming our broken healthcare system not only here in California but around the country,” Nunez said.

Senate President Pro Tem Don Perata (D-Oakland), co-sponsor of the measure, who did not attend a victorious press conference called by Schwarzenegger and Nunez, issued a low-key statement praising progress. He added that he would ask the Legislature’s fiscal experts to determine whether the plan would contribute in further draining the State coffers.

To avoid a two-thirds vote required to pass the bill in the House—and would have required the support of the Republicans–Nunez had left out the measure’s financing details. The initiative would ask voters in November 2008 to approve taxes, thus: $2.6 billion on employers that don’t provide healthcare, $1.5 billion on tobacco users and $2.3 billion on hospitals.

A well-organized opposition is reportedly being organized by business groups and Blue Cross of California, the State’s largest insurer. Tobacco and drug companies are also said to join the fray, armed with their substantial financial clout. The California Chamber of Commerce, which campaigned for repeal of a major healthcare measure in 2004, has characterized the bill as “half a proposal.”

The bill’s passing in the House has resulted in a considerable amount of flak falling in Schwarzenegger’s direction from Republicans, none of whom supported the bill. They accused the Governor of reneging on his pledge not to raise taxes and for bypassing them in order to assure the bill’s passage.

“Our Governor, a governor who promised to not  raise taxes, is in fact working with the majority Democrats in this body to push through the largest business tax increase in the history of California,” said Assemblyman Chuck DeVore (R-Irvine).

Past attempts at reforming the State’s healthcare system have all failed. The supporters of this latest healthcare reform bill hope that as premiums become more expensive and more people go without coverage, the electorate would be willing to risk rewriting the rules of the health insurance market.

Schwarzenegger’s and Nunez’s alliance–which has alienated key political support in order to find a middle ground—has drawn the attention of presidential hopefuls who hope that they could replicate California’s healthcare reform model. Leading Democratic candidates, Sen. Hillary Clinton of New York, Sen. Barack Obama of Illinois and former Sen. John Edwards of North Carolina, have each proposed similar measures.

“It is precedent-setting, because California, the most populous and diverse state in the nation, can make healthcare happen and show this country that it can be done,” said Andy Stern, the President of Service Employees International Union.


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