Health Care Reform Compromise Rumors

Here’s a post that could be out of date by Wednesday, if not sooner:

Rumor has it Governor Arnold Schwarzenegger’s and Speaker Fabian Nunez’s staffs are busy hashing out a compromise that could be brought before the Legislature early this coming week. (I assume Senate Pro Tem Perata’s staff is involved, too). The broad outline is that lawmakers would enact health insurance market reforms while pushing off elements of the reform package that require money to a ballot initiative in 2008. This allows them to both beat the deadline posed by the Legislature’s scheduled adjournment on September 14th and to avoid the political pain and agony of garnering a super-majority in support of their package in both houses of the Legislature.

Among the market reforms would be limiting the percentage of premium health plans can spend on administrative expenses and profit to 15 percent (referred to as an “administrative cap” and requiring carriers to accept all applicants for coverage regardless of the applicants health (“guarantee issue”). Also likely to be included in the market reform portion of the package is expanding small group health insurance regulations to groups of up to 250 employees and eliminating carriers ability to adjust their standard premiums to reflect the risk profile of the applying group.

The revenue-related issues would presumably include premium subsidies for low- and mid-income Californians and the revenue to support them, which could come from fees and/or taxes imposed on employers, hospitals, doctors and individuals.

What’s all this mean? Several things:

1. A Deal is in the Works: Whether this is an accurate outline of a proposed compromise or not, this rumor indicates that serious negotiations are under way and making progress. Rumors this detailed often have some tie to reality. Another indication of progress: Assembly Speaker Fabian Nunez postponed an expected vote on health care reform last week. He’d all but promised a vote on Assembly Bill 8 (the Legislative Leadership’s plan), the Governor’s proposal and others by Friday, August 31st. Pulling back is an indication that there’s likely to be something more substantive to vote on this coming week.
2. Don’t Underestimate the Governor: It wasn’t that long ago that pundits at the Wall Street Journal and elsewhere were saying Governor Arnold Schwarzenegger’s health care reform plan was dead (“doomed” is the word the Journal used). Meanwhile, politicians as bright and savvy as Senate President Pro Temp Don Perata were on on record with the claim the Governor would have to sign virtually any bill the Legislature put on his desk. In my post on the topic, I described the Governor as an adroit politician who may have backed himself into a political corner. Anyone who doubts Governor Schwarzenegger’s political savvy should pay attention. This is a politican who knows his strengths and how to put them in play. In an editorial board meeting with the Sacramento Bee the Governor threatened to veto AB 8 unless it is amended to more closely resemble his own proposal. He follows that up with a hallway chat with several reporters reiterating and clarifying his position. No longer in a corner of any kind, the Governor is now shifted the discussion. He is now controlling the public dialogue on health care reform.
3. Don’t Underestimate the Legislative Leadership: The Governor’s action puts the Legislative Leadership on the defensive, but not for long. Speaker Nunez and Senator Perata could have backed off and let the Governor continue to control public perception of the debate. Instead, Speaker Nunez announces he’ll put the Governor’s proposal into a bill and bring it to the floor of the Assembly for a vote. In the process he challenges the Governor to produce Republican votes for the Administration’s plan (which requires a two-thirds majority vote to pass) or to accept that only AB 8 can muster the votes to become law. The result, the Governor now must muscle a two-thirds vote out of the Legislature or admit his proposal really is doomed.
4. Creativity Trumps Gridlock: Getting Republican legislators to support the Governor’s proposal would be a Herculean task. While the Governor may have played Hercules in the movies, Sacramento is no Hollywood set. One result of all this could have another long legislative deadlock as we witnessed with this year’s state budget. GOP lawmakers have proven their willingness to tie up legislation requiring their support. If the rumors about an initiative are true, however, the Governor and the Legislative Leadership have found a creative solution. By bypassing the Legislature altogether on provisions requiring a two-thirds vote they effectively lockout the GOP minority. In the process they give themselves the flexibility to enact health care reform as they see fit.
5. Politics Still Trumps Policy: So we now know these are savvy politicans applying all their skills to producing a health care reform package — and to produce it quickly. Yet what’s still missing from the debate is an appreciation for the impact of the changes they contemplate. As I’ve previously posted, AB 8 is greatly flawed. Separating it into two pieces doesn’t fix the problems. It may enable them to become law, but that’s not a good thing if they will do more harm than good.

If the Governor and the Legislative Leadership reach a compromise on health care reform before the Legislature adjourns it will be hailed as a political miracle. The media will marvel at how Schwarzenegger, Nunez and Parata pulled back from the brink of public failure and ushered in a new era of health care for the state.

Success, however, should not be measured by when legislation is enacted, but rather by what the new law accomplishes. The measure of success should be results, not action. Passage of a compromise along the lines of the rumor reported here would be no victory. A special session providing lawmakers the time to get health care reform right is both good politics and good public policy. Hopefully we’ll be hearing rumors about just that soon.