Will California take the plunge on health care?

Dr. Edward Newton doesn’t bother wondering whether his patients in the emergency room at Los Angeles County-USC Medical Center have health insurance. He just assumes they all don’t.

About 90 percent of the 400 patients who come through the emergency-room doors here each day are uninsured, according to Newton. Many come with inflamed chronic conditions like diabetes that they can’t keep under control for lack of access to primary, preventative care. All the emergency room can do is stabilize them, provide short-term treatment and send them on their way. Those needing admittance wait hours for a dwindling number of hospital beds.

“The surrounding community is a relatively poor area and a lot of those patients can’t afford health insurance,” said Newton, who besides working in the emergency room is chairman of the Department of Emergency Medicine at the Keck School of Medicine at the University of Southern California. “Patients who come here don’t really have any other options.”

One of the biggest and busiest teaching hospitals in the nation, County-USC in many respects is ground zero for the state’s health-care coverage crisis.

California has 6.6 million uninsured – more than any state – and a third of those reside in Los Angeles County, according to the California HealthCare Foundation, a nonprofit group that studies the state’s health-care delivery and financing. A trendsetting state on issues from cleaning up smog to banning toxic plastics in toys, California now could become a prime test bed for universal health care.

Much like Massachusetts, which last year was the first state to pass legislation making health insurance a legal requirement, California has a high-profile Republican governor working alongside a Democratic-controlled Legislature to solve the problem of the state’s uninsured. But in California, the stakes are even higher than they were in Massachusetts: 12 times the number of uninsured, 14 percent more poverty, eight times the cost, and an exponentially greater potential to be a model for other states or the nation.

The sheer size of California and its volume of uninsured – who outnumber the entire population of Massachusetts – plus the state’s and governor’s political clout could help rev up the momentum for health-reform discussion at the national level, said Drew Altman, head of the Henry J. Kaiser Family Foundation, a nonprofit group that conducts national health-policy research. Health care already is emerging as a major issue in the 2008 presidential election.

“The possibility of something passing in California and the reality of something having passed in Massachusetts is just sending the message nationally that it’s possible to break through the paralysis which has prevented anything from getting done in Washington,” Altman said. “On the other hand, if (California lawmakers) falter, it will take some wind out of the sails of the national movement.”

A special legislative session on health-care reform was called in September by Gov. Arnold Schwarzenegger (R), and negotiations appeared deadlocked for weeks. However, a compromise from Democrats announced Nov. 6 appears to have infused new life into the quest for a deal. The Democrats’ proposal was approved last week on a party-line vote by the Assembly’s Committee on Health.

Assembly Speaker Fabian Núñez (D), who co-wrote the compromise bill with Senate President Pro Tem Don Perata (D), is set to bring it to the Assembly floor for a vote as soon as Nov. 26.

Both sides agree on many of the fundamentals, such as guaranteed access to health-care coverage for all, an emphasis on preventative care and expansion of public programs to leverage federal funds. The stumbling blocks have been over who pays and how much.

The Democrats’ proposal stops just short of requiring all Californians to carry insurance, as it would exempt those who don’t qualify for public programs but whose coverage costs would exceed 6.5 percent of their income. Schwarzenegger wants a mandate for all.

Both sides agree that employers must provide insurance or pay into a state trust fund, which would be used to help lower-income workers buy their own policies. Democrats have proposed to assess employers who don’t provide insurance on a sliding scale up to 6.5 percent of payroll, but Schwarzenegger wants to cap an employer’s contribution at 4 percent. Families that make up to 450 percent of the federal poverty level – about $93,000 a year for a family of four – would be eligible for a tax credit to offset the cost of buying insurance under the Democrats’ plan. The governor wants the tax-credit cutoff set at 350 percent.

While both sides agree on a 4 percent tax on hospital revenue to partially subsidize costs of the overhaul, the Democrats propose to make ends meet with a -a-pack cigarette tax. Schwarzenegger, meanwhile, wants to lease the state lottery. Any tax increase likely would have to be decided by voters, because Republicans have vowed to block the supermajority required for a legislative tax increase.

Key stakeholders want to see a deal brokered because they all stand to gain something.

John Arensmeyer, founder and chief executive officer of Small Business Majority, a nonprofit political-advocacy group based in Sausalito, Calif., said that the recent compromise is moving in the right direction. With health-care costs approaching 11 percent of payroll and rising at a faster rate than inflation, businesses want reform, he said . What they don’t want, he said, is to be assessed a fee without effective subsidized coverage in return.

“Small-business people are not looking to avoid being part of the system,” Arensmeyer said. “Small-business people are looking to have affordable access to health care so they don’t have to have that issue be an impediment to them starting and running their businesses.”

Hospitals say a universal health-care plan will decrease their spending on charity care, increase Medicaid reimbursement rates – which are 47th in the nation – and keep more emergency rooms from closing to save money. Labor interests want to make health care affordable for working families but don’t want a costly individual mandate.

Marian Mulkey, a senior program officer with the California HealthCare Foundation, said there are many key stakeholders with significant interests who could stall the deal if they were determined enough.

“The question, really, is whether any one of those sees the current situation, the status quo, as preferable to whatever the best compromise is that lawmakers come up with,” Mulkey said.

How and whether the state reaches a combination that offers something for everyone could offer valuable lessons for federal lawmakers.

“California policymakers are grappling with many of the same issues that came up in Massachusetts, just under a slightly different guise,” Mulkey said. “And those same issues are the ones that will be central if and when there’s a national policy conversation.”

Assemblyman Hector De La Torre (D), whose district includes County-USC hospital, was a congressional aide in 1994 when then-First Lady Hillary Clinton made her unsuccessful health-care reform proposal. He said the pressure on Capitol Hill to do something about the health-care crisis at that time was palpable.

“Here in California in 2007, I feel we’re at that same political moment in time,” De La Torre said. “I feel like it’s been blown once. We can’t do it again. California, D.C., it doesn’t matter. We’ve got to take advantage of this moment in time.”