November 21, 2007
Pursuant to Elections Code Section 9005, we have
reviewed the proposed initiative entitled “The California Health
Security Plan” (A.G. File No. 07‑0055, Amdt. #1-S). This measure would
amend the State Constitution to establish The California Health Security
Plan (CHSP) to expand health care coverage for California residents.
Background
Health Coverage and the Uninsured.
The majority of Californians receive health coverage through insurance
provided through (1) their employer or the employer of a family member,
(2) the purchase of individual health insurance policies, or (3)
government programs such as Medicaid (known as Medi-Cal in California)
or Medicare. (An estimated total of roughly $200 billion will be spent
on health care in California in 2007 excluding workers’ compensation
claims.) However, some California residents lack health insurance
coverage. Estimates vary regarding the size of the uninsured population,
depending on how the uninsured population is defined. For example, one
survey indicates that in 2003 about 4.9 million Californians were
uninsured at any given time but that about 6.6 million were uninsured at
some point during the year.
Some persons who lack health coverage are
eligible to enroll in health coverage pro-vided by state programs such
as Medi-Cal, but have chosen not to participate in them. Other uninsured
persons are not eligible to enroll for such coverage. Persons who are
uninsured for either reason may qualify to receive free or low-cost
medical assistance from counties, which are generally responsible under
state law for providing health care for low-income persons who lack
health coverage. Other uninsured persons rely on free or low-cost health
care from medical providers, including private clinics, hospitals, or
physicians, often referred to as charity care.
If a worker’s injury or sickness is work related,
then workers’ compensation insurance bears the cost of providing medical
treatment and other benefits within specified limitations. All
California employers must provide workers’ compensation benefits to
their employees including: (1) medical care, (2) temporary disability
benefits, (3) permanent disability benefits, (4) vocational
rehabilitation benefits, and (5) death benefits. Under state law,
businesses, as well as state and local governments, must purchase
workers’ compensation insurance or self-insure to pay these expenses. In
2006, costs for workers’ compensation insurance were potentially as much
as $20 billion for all California employers.
Proposal
This measure amends the Constitution to establish
the CHSP to expand health care coverage for California residents and to
implement the principle of equal health care for all CHSP members. The
measure requires that CHSP be administered to achieve the goals of equal
outreach, access, treatment, and outcomes for all persons eligible to
receive services under the plan. Furthermore, the measure requires CHSP
to be evaluated based on data to determine the extent to which these
goals are being achieved by the plan. The measure would also require
that the privacy of medical records be maintained and that beneficiaries
have the right to obtain written copies of their health care records.
The measure requires the Legislature and the
Governor to implement CHSP within one year, following its approval by
the voters and certification of the election results by the Secretary of
State (SOS). In order for CHSP to actually become effective, several
legislative and administrative steps, which we discuss later, would have
to be taken.
Eligibility for the Plan. All
current residents who have physically resided in the state for ten
months of the previous year are eligible to enroll in CHSP. The CHSP
will automatically enroll and deliver membership cards to persons and
their dependents who have both filed an income tax return in California
and have a California address.
CHSP Administration. The measure
creates the California Health Security Board (CHSB) to administer plan
benefits. The first CHSB would be appointed by the Legislature within 60
days of certification of passage of this measure by SOS. The CHSB would
be comprised of members who meet certain requirements specified in the
measure, with one member from each of the state’s 53 congressional
districts. Thereafter, election of CHSB’s 53 members would occur
simultaneously with the presidential election. The CHSB’s
responsibilities include:
The CHSB is empowered to negotiate prices for all
goods and services purchased by the plan, although, the measure does not
require that the CHSB perform this function.
Benefits. Under this measure, the
CHSP pays for the health care of members and covers all health care
deemed medically necessary by the CHSB. The measure specifies that
“health care” includes all treatments, prescription drugs, devices,
emergency care, preventive measures, rehabilitative care, long-term
care, mental healthcare, dental care, vision care, women’s healthcare,
and other care classified as medically necessary by the CHSB. The
measure also specifies that health care includes care for work-related
injuries that generally are currently covered under workers’
compensation.
Funding. The plan shall be fully
funded by such general revenues and sources as the Legislature may
enact. The measure prohibits the use of premiums, co-payments, or
deductibles as means to pay for CHSP or limit its costs.
Fiscal Effect
Major Implementation Decisions Left to
Legislature and Governor. This measure leaves many of the
decisions on how to implement CHSP to the Legislature and the Governor.
For example, the Legislature and Governor would determine whether to
in-corporate existing federal (federal approval would be necessary to
make such a change), state and local health care programs into CHSP or
whether to have CHSP “wrap around” these existing health care programs.
Furthermore, the Legislature and Governor would potentially have to
determine how CHSP would replace or wrap around private health
insurance, and workers’ compensation, or whether some form of integrated
system would be implemented. Depending on whether and how the
Legislature and Governor incorporate existing health care programs and
their associated funding streams into CHSP, the size and complexity of
CHSP would vary.
Implementation Would Determine Net Fiscal
Impact. Because the CHSP would provide insurance to most or all
of the 4.9 million currently uninsured Californians, the measure would
result in increases in annual state and local government expenditures on
health care, potentially in the low tens of billions of dollars. The
costs to state and local government would depend on a number of factors,
including the following:
-
Which federal,
state, and county health care programs were incorporated into the
new health care system.
-
Whether private
health insurance and workers’ compensation were incorporated into
the new health care system.
-
How implementation
of the new system changed the specific benefits avail-able to health
care consumers, as well as consumers’ access to those benefits.
-
How the new system
affected the utilization of health care services by individuals,
including by those who are currently uninsured.
-
The magnitude of any
potential administrative savings over the long term and other
efficiencies that could be achieved under the system, such as
simplification of billing processes or better prices on prescription
drugs due to bulk purchasing arrangements.
-
Whether the new
system effectively promotes primary care thereby resulting in
reduced use of emergency rooms.
-
Future decisions by
the Legislature and Governor to increase or decrease the level and
source of funding available to support the system.
Some Fiscal Effects Can Be Identified.
Some components of the measure have identifiable costs, which are
discussed below.
The measure would likely result in one-time
costs, potentially in the hundreds of millions of dollars, to purchase
computer systems to support the eligibility determination and enrollment
process for CHSP. Furthermore, the measure would likely result in
ongoing costs potentially of a few hundred million dollars annually to
perform eligibility determinations for California residents and enroll
qualified California residents and income tax filers and their
dependents in the plan and provide them with their membership cards.
The CHSB would incur administrative and
operational costs as it performed its du-ties, such as preparing the
annual report on Californians’ health security. These costs could be in
the low millions of dollars to several tens of millions of dollars
annually de-pending on the range of functions the board performs.
Overall Net Fiscal Impact Uncertain.
While this measure would have some identifiable costs to state and local
government, many critical decisions regarding its structure and
implementation would be made by the Legislature and the Governor.
Expanding health care coverage to the uninsured would result in costs
potentially in the low tens of billions of dollars. The costs could be
greater or lesser than this depending on actions taken by the
Legislature and Governor to structure the program.
Summary
The measure would have the following major direct
fiscal impact:
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