In California, big plans to expand health coverage

A sweeping plan by Gov. Arnold Schwarzenegger (R) to guarantee health insurance for all Californians – including children of illegal immigrants – is being characterized both as a bold model for improving healthcare access and as a costly government intrusion that will hurt the state's economy.

Arguments for and against near-universal healthcare have already been fought out in the few other states that have moved ahead with health-insurance reforms, namely Massachusetts and Vermont. But the sheer numbers involved in Governor Schwarzenegger's proposal – a $12 billion price tag and coverage for 6.5 million people who currently don't have health insurance – are guaranteed to raise the stakes as the California legislature considers whether to approve it.

Among the ranks of the uninsured are about 763,000 children. Of the plan's overall cost, about $400 million would be spent on those minors, no matter what their immigration status is. That aspect, in particular, is winning kudos from family groups nationally, even as it raises the ire of immigration-control advocates who worry the healthcare provision will make California that much more of a magnet for illegal immigration.

The governor, who unveiled the overhaul plan Monday, said he wanted to provide "accessible, efficient, and affordable healthcare to every Californian."

The proposal "will not only be enormously helpful for California children but will also play a very significant role at the national level," says Ron Pollack, executive director of Families USA, a nonpartisan organization that urges affordable healthcare for all Americans. "This will no doubt lend enormous support for the federal government's providing states with significant funding to expand coverage to uninsured children" through the State Children's Health Insurance Program, says Mr. Pollack, noting that the joint federal-state program is up for reauthorization.

Of all the parts of Schwarzenegger's plan, health insurance for all children may prove to be among the least controversial, say those who back the idea. In a poll released Nov. 30 by The United Ways of California (an advocate of universal child health insurance), 81 percent of likely voters in California said they support ensuring that all children have health insurance.

"Elected officials are catching up to where voters are. They know children are the most vulnerable in the population and the least expensive to cover but [that coverage will] buy a lifetime of benefit," says Wendy Lazarus of the Children's Partnership, a nonpartisan child-advocacy group based in Santa Monica, Calif., and Washington. "Governor Schwarzenegger and his advisers are saying, 'We understand.' "

Several states have been floating ideas to expand access to health coverage generally, or for children specifically. Besides Massachusetts and Vermont, New Jersey, Connecticut, Maryland, New Hampshire, Florida, Illinois, Maine, and New York are looking at health-insurance reforms. So far, the California proposal is more comprehensive for children than most – guaranteeing medical coverage for children of families earning up to 300 percent of the poverty level, or $60,000 a year.

To pay for children's coverage, Schwarzenegger calls for expanding the state's Healthy Families program, possibly by using as much as $500 million saved annually by ending state welfare payments to poor families after five years.

"I see discussion over this payment issue as something that will immediately get the backs up of Democrats, [who will be] saying, 'Hey, you can't take it from those who needs it the most,' " says Larry Gerston, a political scientist at San Jose State University.

More broadly, the call to ensure that 6.5 million Californians – 1 in 5 – get health coverage is raising cost concerns among lawmakers in Schwarzenegger's own party, among other players.

Under his plan, employers who do not provide health insurance to workers would be required to pay into a fund that would be used to help cover the working uninsured. Doctors and hospitals in the state would also be tapped – 2 percent of revenues for doctors, 4 percent for hospitals – so that those who treat low-income Medi-Cal patients could be reimbursed for their care at a more generous rate than is now the case. State Republican leaders have already complained that these elements could devastate the state economy.

"Imposing a new jobs tax on employers of any size, and expanding costly government mandates, is the wrong approach," says Assembly Republican leader Michael Villines. "It is vital that lawmakers fully consider the impact our actions will have on jobs, the economy, hard-working families, and the state budget."

Some observers say the plan may falter as legislators try to iron out its details. "I worry that this plan is so comprehensive that it will fall apart," says Arnold Torres of the California Hispanic Health Care Association. "I don't think anyone has yet provided the kind of presentation to explain how all of this is going to come together."